Tokyo Stocks Plunge 2.4% on Machinery Orders

Trupti Mehta
08 Jul, 2009
New York City

Japan stocks fell sharply as yen strengthened and seasonally adjusted private sector orders in May fell. The current account in the month also declined 34.3% as exports fell 42%. Machinery companies declined after the release of orders data.

[R]7:00 PM Tokyo, 5:00 AM New York – Japan stocks fell sharply as yen strengthened and seasonally adjusted private sector orders in May fell. The current account in the month also declined 34.3% as exports fell 42%. Machinery companies declined after the release of orders data.[/R]

Machinery orders in May declined as most companies continue to delay plans to modernize and add capacity. Corporations are operating at a substantially lower operating capacity and exports of equipment are still declining.

Seasonally adjusted orders in May declined 3% after excluding the volatile orders of ships and electric power plants. The unadjusted orders increased 1.5% and private sector orders increased 17.7%.

For the first fiscal quarter the orders decreased 9% and seasonally adjusted private orders in the period declined 5%.

The current account surplus fell 34.3% in May to $13.6 billion after falling 54% in April according to Finance Ministry. In the month trade surplus decreased 22% on 42% decline in exports.

The Nikkei 225 Stock Average declined 2.4% or 227.04 to 9,420.75 and yen increased to 94.45 against a dollar and added 131.39 against a euro.

Gainers & Losers

Machinery and semiconductor equipment makers dropped after the release of weaker than expected orders reports from the Cabinet.

Makita Corp decreased 3% to 2,165 yen, Amada declined 4.1% to 556 yen and Advantest Corp declined 2.9% to 1,684 yen.

Banks closed lower on the worries that earnings for the quarter just completed may be lower than expected.

Bank of Yokohama declined 5.2% to 503 yen, Chiba Bank Lt dropped 2.5% to 598 yen and Mitsubishi UFJ fell 3.4%.

Nomura Holdings dropped 5.3% to 751 yen and Daiwa Securities declined 4% to 532 yen.

Daiwa said that it plans to raise $2.1 billion or 198 billion yen in an offering to be conducted on July 9 and 10 that will price its share at 516 each. The company initially expected to raise 240 billion yen in the offering but since then the stock has declined in the last ten days.

Toyota Motor declined 3.4% to 3,470 yen and Honda Motor fell 4% to 2,390 yen.