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Japanese stocks fall on profit-taking

Japanese stocks fall on profit-taking
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First Published: Tue, Aug 12 2008. 01 36 PM IST
Updated: Tue, Aug 12 2008. 01 36 PM IST
By Yuri Kageyama / AP
Tokyo: Japanese shares fell on profit-taking Tuesday following two straight sessions of gains. Worries about higher domestic prices and China’s economy also helped to pull the market lower.
The benchmark Nikkei 225 Stock Average shed 127.31 points, or 0.95%, to 13,303.60 after rising 1.99% on Monday. The broader Topix index dropped 0.67% to 1,271.42.
The fall came despite a strengthening dollar and falling crude oil prices, which both tend to be a plus for Tokyo shares. The dollar, which had fallen to levels around below 100 earlier in the year, was trading at about 110 yen, holding on to recent gains.
Meanwhile, oil prices fell to a three-month low as a stronger dollar and weakening crude demand from China weighed on investor sentiment.
Light, sweet crude for September delivery had dropped below $114 a barrel in electronic trading on the New York Mercantile Exchange by midafternoon in Singapore.
Hideyuki Ishiguro, supervisor at Okasan Securities Co. in Tokyo, said that the Nikkei was likely to stay boxed in around 13,000 points for some time because of worries about the global economy.
“Corporate performance is lagging, and even with oil prices stabilizing, increasing material costs are likely to weigh on companies,” he said.
“Of particular concern was a Bank of Japan report released Tuesday that found the nation’s corporate goods prices rose at their fastest pace in more than 27 years amid surging oil and commodities prices,” said Ishiguro.
Japan’s index for domestic corporate goods prices in July climbed 7.1% on year to 112, marking the fastest pace since an 8.1% gain in January 1981.
Chinese economy
Among the biggest losers were steel companies, including JFE Holdings, which dropped 6% to 4,480 yen. Nippon Steel Corp. lost nearly 5% to close at 516 yen.
Toyota Motor Corp., which has been gaining on the back of a stronger dollar, held relatively steady, dropping 0.2% to 5,020 yen.
The Japanese automaker has reported shrinking profit, signaling that its rapid pace of growth may be over, but it has held on to its forecast for the full year, delivering some relief for worried investors.
Worries about the Chinese economy are also putting downward pressure on the Tokyo market. Some traders are speculating about a crash after the Olympic Games end as Shanghai shares have been declining defying hopes for an Olympic rally.
Analysts fear any weakening of the Chinese economy and a drop-off in markets there could drag down the whole region.
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First Published: Tue, Aug 12 2008. 01 36 PM IST
More Topics: Japan | Markets | Stocks | Nikkei | Topix |