Steelmakers in Japan Surge; Rates on Hold

123jump.com Staff
17 Sep, 2009
New York City

Steelmakers in Japan surged after JFE Holdings was reported to start a second steel mill next month. Banks fell for the fifth day in a row on the worries that the government demand loan moratorium for small businesses. Japan left its key lending rate at 0.1% and direct loan program intact.

[R]8:30 AM Tokyo – Steelmakers in Japan surged after JFE Holdings was reported to start a second steel mill production next month. Banks fell for the fifth day in a row on the worries that the government demand loan moratorium for small businesses. Japan left its key lending rate at 0.1% and direct loan program intact.[/R]

The Bank of Japan left its key lending rate at 0.1% and kept its direct lending program to corporations intact. The accompanying statement indicated that global economies are showing signs of recovery on the government stimulus.

The interest rates are expected to near 0.1% till the end of 2010 as Japan battles excess manufacturing capacity and falling consumer prices.

The central bank also noted that the economic conditions are expected to improve in the latter half of the fiscal 2009 as global economies recover on global stimulus and rising exports. However, corporate profits in Japan are declining and fixed investments are on hold.

The statement also noted, “The Bank''s baseline scenario through fiscal 2010, in which expectations of medium- to long-term growth are assumed to remain generally unchanged, projects that the economy will start recovering from the latter half of fiscal 2009.”

The Nikkei 225 Index in Tokyo closed higher 173.03 or 1.68% to 10,443.80 and the yen closed at 90.61 against a dollar. Stocks fell after the release of the statement but recovered in the afternoon trading.

Gainers & Losers

Trading companies, steel makers and commodities processors led the charge in trading.

JFE Holdings soared 5% to 3,390 yen after Nikkei News reported that the company may restart steel mill in less than a month to process more orders. Kobe Steel increased 3% and Nippon Steel advanced 4.1% to 353 yen.

Inpex Corp increased 3.5% to 825,000 yen after crude oil prices traded above $72 a barrel.

Mitsui & Company increased 3.2% to 1,251 yen and Marubeni Corp added 2.1% to 479 yen.

Banks declined as investors worried that the new administration will ask loan moratorium for small and medium sized corporate customers.

Sumitomo Mitsui dropped 5.6% to 3,360 yen and Mizuho Financial decreased 1.5% to 192 yen. Mitsubishi UFJ fell 1.9% to 516 yen.

Industrial companies gained. Mitsui Mining & Smelter increased 4.4% to 260 yen and Mitsubishi Materials added 1.8% to 288 yen.

Komatsu Ltd advanced 2.9% to 1,804 yen, Hitachi Construction Machinery Co added 2.7% to 2,095 yen, IHI Corp added 2.1% to 191 yen and Asahi Glass Co increased 2.4% to 779 yen.

Nikkei 200 Average Movers

Sumitomo Mitsui Financial Group, Inc. led the decliners in the Nikkei 225 index of 5.3% followed by losses in The Chiba Bank, Ltd. of 4.9%, in Oki Electric Industry Company, Limited of 3.4 %, in Mitsubishi Estate Company, Limited of 2.7% and in Mazda Motor Corporation of 2.1%.

Yokogawa Electric Corporation led gainers in the Nikkei 225 index with a rise of 10.5% followed by gains in Dowa Holdings Co., Ltd. of 3.2%, in Sky Perfect Jsat Holdings Inc. of 5.8% and in Advantest Corporation of 5.2%.

Asian Markets Review

The Nikkei 225 Index in Tokyo closed higher 173.03 or 1.68% to 10,443.80, Hang Seng index in Hong Kong increased 365.59 or 1.71% to 21,768.51 and CSI 300 index in China higher 61.86 or 1.90% to 3,320.10. ASX 200 index in Australia increased 64.50 or 1.39% to 4,714.90. The FTSE Bursa KL Composite index in Malaysia closed higher 5.82 or 0.48% to 1,218.80.

The Kospi Index in South Korea increased 12.14 or 0.72% to close at 1,695.47. SET index in Thailand closed lower 1.02 or 0.14% to 709.23 and JSE Index in Indonesia increased 17.63 or 0.72% to 2,456.99. The Sensex index in India increased 34.07 or 0.20% to 16,711.11.