Japan Automakers Slash Production; Yen Falls

Darlington Musarurwa
26 Feb, 2009
New York City

Three largest automakers in Japan slash production as domestic market remains weak and exports to the U.S. plunge. Toshiba Corp is in a deal to build two nuclear power plants in south Texas. Rising oil prices dragged commodities linked stocks lower.

[R]5:00AM New York, 7:00PM Tokyo – Three largest automakers in Japan slash production as domestic market remains weak and exports to the U.S. plunge. Toshiba Corp is in a deal to build two nuclear power plants in south Texas.[/R]

The benchmark stock index fell in Japan on worries that rising oil prices will negatively impact on profit margins and investor sentiment was also rattled by a report that indicated that Japan’s three biggest carmakers cut production between 35% and 54% last month.

Weakening yen however lifted trading sentiment and trimmed market losses.

Market Sentiment

In Tokyo trading Nikkei 225 index shed 0.04% or 3.29 to 7,457.93, and the broader Topix Index declined 0.4% or 3.09 to 742.53.

In the first section of the Tokyo Stock Exchange 9.4 billion shares worth 572 billion yen were traded and in the second section 79 million shares valued at 1 billion yen changed hands.

Of the Nikkei 225 index stocks, 111 rose, 102 declined, and 12 were unchanged. Shinsei Bank led gainers in the index with a rise of 11.1%. Isuzu plunged 3.1% and Nissan plummeted 2.3%.

Three Largest Automakers Cut Production

Toyota announced that production fell 39.1% to 487,984 units in January from a year ago and production at Honda plunged 33.5% to 226,551 units. Nissan slashed its production 54% to 145,286 units. The news was first reported by Nikkei News.

Toyota cut its production in Japan by 40% and in the U.S. by 65%, also global exports fell 57% as shipments to the U.S. declined 80%.

In addition, total exports at Honda and Nissan tumbled 23.4% and 31% respectively.

Toshiba to Supply Two Nuclear Plants in the U.S.

Toshiba Corp. reported yesterday that its U.S. based subsidiary Toshiba America Nuclear Energy Corporation has signed an agreement with STP Nuclear Operating Company for the supply of two advanced water reactor nuclear plants at the South Texas Project units 3 and 4.

The plants will have output of approximately 1,400 megawatts each and are expected to start in 2016 and 2017.

Gainers & Losers

Shinsei Bank led advancers in the Nikkei 225 index shares with a gain of 11.1% followed by increases in Japan Steel Work of 7.5%, in Ebara Corp. of 6.9%, in Toppan Printing of 5.9%, and Asahi Glass Co. of 5.6%.

Advantest Corp. led decliners in the Nikkei 225 index shares with a decline of 12.7% followed by losses in Daiichi Sankyo of 9.5%, in CSK Holdings of 6.9%, in Mitsubishi Rayon Co. of 6.4%, and Fuji Heavy Industries of 4.9%.

Bridgestone Corp. fell 4.5% after crude oil prices increased 6% to $42.5 per barrel.