Tokyo Stock Up 2%, Auto Sales Plunge

123jump.com Staff
05 Jan, 2009
New York City

Stocks in Japan rose after the yen fell and on the hopes that U.S. tax relief will stimulate demand for exports from Japan. Vehicle sales in December dropped 23% and for the year declined 6.5% from a year ago. Vehicle sales declined for the fifth year in a row.

[R]5:00AM New York, 7:00PM Tokyo - Japan car sales decline 5% to 5.08 million in 2008 and plunged 28% in December. ANA scraps plans to buy Airbus A380.[/R]

Stocks in Japan rose 2% on the hopes that the proposed tax cuts from the Obama administration will help the global economy from sliding in to a deepening recession. A weaker yen also strengthened investor sentiment.

Market gains were trimmed by the news that Japan car sales fell to a 28-year low in 2008.

Market Sentiment

In Tokyo trading Nikkei 225 index rose 2.1% or 183.56 to 9,043.12, and the broader Topix Index gained 1.9% or 16.67 to 875.91.

In the first section of the Tokyo Stock Exchange 11.4 billion shares worth 772 billion yen were traded and in the second section 176 million shares valued at 1.7 billion yen changed hands.

Of the Nikkei 225 index stocks, 165 increased, 52 declined, and 8 were unchanged. Pioneer Corp. led advancers in the index shares with a rise of 17.8%.

Japan Car Sales Decline 5%

Japan Automobile Dealers Association and Japan Mini Vehicles Association said 2008 sales of mini-cars, cars, trucks and buses fell 5% to 5.08 million vehicles from 5.35 million a year earlier.

Toyota vehicle sales tumbled 7.4% to 1.47 million units and Nissan sales plunged 5.9% to 678,160 units. However, sales from Honda Motor Co. edged up 0.4% to 624,547 units on high demand for compact car and minivan.

In December vehicle sales, excluding mini-cars fell 22% to 183,549 after dropping 27%, the busy month for sales, in November.

Vehicle sales have declined for the fifth year in a row, excluding mini-cars to 3.23 million from 3.43 million in 2007, a 6.5% decline, and lowest since 1974 sales of 3.13 million according to the association.

U.S. Plans US$310 billion Tax Cut

The U.S. President-elect Barack Obama and congressional Democrats are planning US$310 billion of tax cuts to individual and businesses to stimulate the economy and create jobs.

The tax cuts could be 40% of a $775 billion stimulus package.

A large portion of the tax relief will be targeted to people who pay income taxes or who claim the earned-income credit.

Obama plan will provide tax credit to offset Social Security and Medicare payroll taxes of US$500 per individual or US$1,000 per family.

The Obama plan may allow companies to write off losses incurred last year, as well as any losses in 2009, to retroactively reduce tax bills dating back five years.

In addition, the package offers a one-year tax credit for companies that hire new staff or reverse layoffs, which could be worth between US$40 billion and US$50 billion, while small businesses will be allowed to write off a range expenditures worth up to US$250,000 in 2009 and 2010 from the current limit of US$175,000.

Yen Falls

The yen dropped to 92 against the dollar from 91.83 on Friday last week.

Gainers & Losers

Pioneer Corp. led advancers in the Nikkei 225 index shares with a rise of 17.8% followed by increases in Pac Metals of 16.3%, in Mizuho Financial Group of 15.6%, in Sumitomo Mitsui of 11.4%, and Mitsubishi Materials of 9.9%.

Energy stocks increased after crude oil prices jumped to $46 a barrel as Israeli troops launched a ground operation in Gaza stoking worries of disruption of supplies. Mitsui & Co. increased 8.6% and Mitsubishi Corp gained 9.2%.

Sky Perfect JSAT HD led decliners in the Nikkei 225 index shares with a drop of 4.7% followed by losses in Shionogi & Co. of 4.1%, in GS Yuasa Corp. of 3.9%, in Tokyo Dome Corp. of 3.3%, and Meiji Seika of 3.3%.

Utilities declined. Chubu Electric shed 2.4% and Tokyo Electric Power declined 1.8%.

Airbus Scraps Plans to Buy Airbus A380

The Yomiuri reported today that All Nippon Airways will shelve plans to buy five Airbus A380 planes to slash capital expenditure.

ANA plans to cut expenditure between 100 billion and 200 billion yen from the planned 900 billion yen expenditure in four years to March 2012.