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Japanese Market Falters After Opening Higher

5/8/2011 9:55 PM ET

After moving higher in early trades thanks to a positive lead from Wall Street, the Japanese market faltered on Monday with investors pressing sales, hurt by concerns about the yen's rise against the greenback and on possible disruption in power supply due to likely suspension of all reactors at Chubu Electric Power Co.'s Hamaoka nuclear power plant in Omaezaki.

The benchmark Nikkei 225 index, which advanced to 9,897.9 in early trades but tumbled to 9,802 subsequently, is now at 9,825.9, down 33.3 points or 0.3 percent from its previous close.

Retail, automobile, foods and paper stocks are trading weak. Mining, oil, insurance and real estate stocks are finding some support, while financial and pharmaceuticals stocks are trading mixed.

Chubu Electric Power shares are down nearly 12 percent. Fast Retailing is down 3.3 percent from its previous closing price. Kirin Holdings, Kansai Electric Power, IHI Corp., Japan Tobacco, Nippon Electric Glass, Tokyo Electronic, Mitsubishi Electric Corp., Denso and Yokogawa Electric are down 1.5-3 percent.

Among automobile stocks, Mazda Motor, Toyota Motor, Mitsubishi Motor, Nissan Motor and Suzuki Motor are trading weak.

In the banking space, Mizuho Financial, Shinsei Bank and Mitsubishi UFJ Financial are up with notable gains. Bank of Yokohama is up marginally, while Shizuoka Bank and Chiba Bank are trading weak.

Tokyo Electric Power is trading nearly 5 percent up. Showa Shell is gaining more than 3 percent. Sumitomo Corp., NGK Insulators, Sony Corp., Oki Electric, Taiheiyo Cement, Inpex and Tobu Railway are among the other notable gainers.

According to the minutes of Bank of Japan's meeting on April 6 and 7, members of the bank's monetary policy committee felt Japan's economy continued to be under heavy downward pressure following the March 11 earthquake and tsunami.

"Japan's economy is under strong downward pressure, mainly on the production side, due to the effects of the earthquake disaster," the minutes said. "Specifically, the earthquake has sharply dampened production in some areas by damaging production facilities, disrupting the supply chain, and constraining electric power supply; exports and domestic private demand have been affected accordingly."

At the meeting, the board maintained the uncollateralized overnight call rate at around 0 to 0.1 percent by a unanimous vote. The board also judged it necessary to provide longer-term funds to financial institutions in disaster areas so as to support restoration and rebuilding works. Accordingly, it will offer maximum 1 trillion yen loans at a rate of 0.1 percent per annum. Loans will be given for a period of one year against pooled collateral.

In the currency market, the U.S. dollar traded in the upper 80 yen level in early deals in Tokyo. The yen is currently trading at 80.66 to the U.S. dollar.

Among other markets in the Asia-Pacific region, Australia and Singapore are up with notable gains. Hong Kong, Malaysia, New Zealand and Taiwan are trading modestly higher, while South Korea is trading weak. Markets across the region ended mostly lower on Friday.

On Wall Street, stocks moved higher in early trading on Friday on upbeat jobs data, but gave up most of their gains as the session progressed amid reports Greece is likely to leave the European Union.

The Dow ended up 54.6 points or 0.4 percent at 12,638.7, the Nasdaq advanced by 12.8 points or 0.5 percent to 2,827.6 and the S&P 500 moved up 5.1 points or 0.4 percent to 1,340.2.

Major European markets posted notable gains on Friday. The U.K.'s FTSE 100 index surged 1 percent, while the French CAC 40 index and the German DAX index gained 1.3 percent and 1.6 percent, respectively.

Crude oil prices declined for a fifth successive session on Friday and ended with with the biggest weekly loss in dollar terms since 1983. Light, sweet crude for June delivery ended the session with a loss of US$2.62 or 2.63 percent at US$97.18 a barrel on the New York Mercantile Exchange, after trading in the range of US$94.63 to US$ 102.38.

by RTT Staff Writer

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