Japan Weak Economic Rebound, Nikkei Falls 3.1%

Darlington Musarurwa
17 Aug, 2009
New York City

Japan GDP rebounded 0.9% in the second quarter ending in June on a turnaround in exports and a rise in industrial production. Most economists attributed the milder than expected rebound as temporary. Stocks declined sharply on weak commodities prices and U.S. consumer confidence report.

[R]8:00 PM Tokyo, 7:00 AM New York – Japan GDP rebounded 0.9% in the second quarter ending in June on a turnaround in exports and a rise in industrial production. Most economists attributed the milder than expected rebound as temporary. Stocks declined sharply on weak commodities prices and U.S. consumer confidence report.[/R]

The economy rebounded in Japan in the second quarter from the historic lows in the first quarter and falling for the four quarters in a row.

The GDP in the quarter rose 0.9% and at 3.7% annualized rate on the turnaround in exports and rising industrial production to meet inventories demands.

The economic rebound follows four consecutive quarters of decline totaling nearly 9% fall and weak demand from consumers. At its worst in the fourth quarter last year the annualized fall peaked at 11.7%, revised today from the previous estimate of 14.2%.

The latest data from Japan only adds to the positive economic reports from Germany, France and cautious view from the Federal Reserve in the U.S. However, investors were still unconvinced.

Much of the rebound was also linked to the one-time government stimulus and domestic consumption and labor markets remain weak. Investors were also unnerved by the latest foreign direct investment from China and weak commodities import report.

Stocks declined on weaker than expected U.S. consumer confidence report and weak rebound in the domestic economy.

The Nikkei 225 Index in Tokyo closed lower 328.72 or 3.10% to 10,268.61and the yen edged higher against the dollar to 94.63 and commodities prices declined.

Of the stocks in the Nikkei 2205 index, 6 increased, 218 decreased and 1 was unchanged.

Gainers & Losers

Exporters and commodities linked stock led the decliners.

Sony fell 4.1% to 2,605 yen and Nintendo declined 2.6% to 24,750 yen.

Toyota Motor decreased 2.7% to 4,010 yen, Nissan Motor fell 3.4% to 704 yen and Honda Motor dropped 3.9% to 3,000 yen.

Steelmakers also edged lower. Japan Steel Works fell 4% to 1,213 yen, JFE Holdings Inc declined 2.2% to 3,590 yen and Nippon Steel dropped 2.8% to 377 yen.

Denki Kagaku Kogyo K.K. surged 5.2% after Japan reported its death from swine flu.

Minerals and mining companies declined. Nippon Oil declined 4.2% to 530 yen, Nippon Mining Holdings dropped 3.8% to 482 yen and PAC Metals dropped 3.82% to 832 yen.

Trading companies edged lower. Marubeni Corp fell 3.4% to 455 yen, Mitsubishi Corp declined 3.6% to 1,922 yen and Mitsui & Company dropped 4.2% to 1,241 yen.

Nikkei 200 Average Movers

CSK Holdings Corporation led the decliners in the Nikkei 225 index of 8.3% followed by losses in Credit Saison Co, Ltd of 6.4%, in NTN Corp of 6.3%, in Fuji Electric Holdings Co Ltd of 6.1% and in DOWA Holdings Co Ltd of 6.0%.

Denki Kagaku Kogyo K K led gainers in the Nikkei 225 index with a rise of 4.6% followed by gains in Ube Industries Ltd of 3.5%, in Daiichi Sankyo Co Ltd of 2.8% and Showa Denko KK of 0.5%.

Asian Markets Review

The Nikkei 225 Index in Tokyo closed lower 328.72 or 3.10% to 10,268.61, Hang Seng index in Hong Kong decreased 755.68 or 3.62% to 20,137.65 and CSI 300 index in China lower 204.19 or 6.11% to 3,140.27. ASX 200 index in Australia decreased 72.60 or 1.63% to 4,388.40. The FTSE Bursa KL Composite index in Malaysia closed lower 19.52 or 1.64% to 1,169.05.

The Kospi Index in South Korea decreased 44.35 or 2.79% to close at 1,547.06. SET index in Thailand closed lower 22.20 or 3.39% to 632.05. The Sensex index in India decreased 626.71 or 4.07% to 14,784.92. The Indonesian Market was close today.