Tokyo Plunged 7%, Asian Markets Follow

123jump.com Staff
20 Nov, 2008
New York City

Stocks in Japan plunged 7% to below key 8,000 mark as investors increasingly worry about the depth of the U.S. economic recession. US lawmakers appear to be still lacking the grasp of the current economic crisis and Secretary Treasury appears to lack direction or a plan.

[R]5:00AM New York, 7:00PM - Japan’s trade deficit in October increased to 63.9 billion yen.[/R]

Japan market indices plunged on the worries of a deepening recession in the Western economies after exports fell the most in seven years and U.S. consumer prices dropped the most since 1947.

Pacific Economic Cooperation Council forecasted that Japan''s economy will contract by 0.9% in 2009.

In Tokyo trading Nikkei 225 fell 6.9% or 570.18 to 7,703.04, and the broader Topix Index dropped 5.5% or 45.15 to 782.28.

In the first section of the Tokyo Stock Exchange 21 billion shares worth 1.6 trillion yen were traded and in the second section 307 million shares worth 2.7 billion yen changed hands.

Of the Nikkei 225 stocks 6 rose, 218 declined, and one was unchanged. Sumitomo Osaka led gainers in the index shares with a rise of 4.1%.

Trade Deficit Soars to 63.9 billion in October

Ministry of Finance in Japan reported today that the country''s exports declined 7.7% in October from the prior year period. Imports increased 7.4% year-on-year, yielding a trade deficit of 63.9 billion yen. Most economists had estimated surplus of 80 billion yen.

Exports to Asia dropped 4% in the period and shipments to China slid 0.9%, the first decline in three years.

In addition, shipments to Europe plummeted 17.2%, the most in seven years, and exports to U.S. slipped 19%.

Japan''s Economy Forecasted to Shrink

Pacific Economic Cooperation Council reported today that Japan''s economy is expected to contract 0.9% in 2009 and rebound to 1.8% in 2010.

China is projected to grow between 8% and 9% in 2008 and 2009 on strong domestic demand and increased government spending with the Rmb4 trillion stimulus plan.

The PECC forecasts economic growth in the Asia-Pacific region will fall by half to 1.2% next year. The report forecasted lower production on the U.S. economy shrinking by 0.5% in 2009.

PECC noted, “The biggest uncertainty in this forecast is whether the worldwide array of policies aimed at thawing the credit freeze will have their intended effects and how long it will take for these measures to have effect.”

U.S. Consumer Prices Fall 1% in October

U.S. Labor Department reported yesterday that the country''s consumer prices dropped 1% in October on a seasonally adjusted basis. Economists had earlier forecasted that prices will drop 0.9%.

Energy prices fell 8.6%, falling the most since 1957, while food prices increased 0.3%. Gasoline prices dropped 14.2%.

The core consumer price index, excluding food and energy price inputs, fell 0.1%. Analysts had expected core prices to increase 0.1%.

Gainers & Losers

Sumitomo Osaka led advancers in the Nikkei 225 index shares with a rise of 4.2% followed by increases in Tokyo Gas Co. of 2.2%, in Tokyo Electric Power of 1.7%, in West Japan Railway of 1.4%, and Japan Tobacco of 0.7%.

Sumco Corp. led decliners in the Nikkei 225 index shares with a fall of 18.4% followed by losses in Isuzu Motors of 16.9%, in Mitsui Sumitomo of 16.4%, in Tokyo Marine HD of 15.3%, and Sompo Japan Insurance of 14.7%.

Commodity stocks declined after metal prices fell as worries of a global recession deepened. Crude oil prices slid $0.77 to $53.6 per barrel. Mitsubishi Corp. plunged and Pac Metals both plunged 13%.

Realty stocks also declined. Mitsui Fudosan and Mitsubishi Estate Co. fell 14% and 12.9% respectively.