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Nikkei at two-week closing low

Nikkei at two-week closing low
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First Published: Mon, Aug 04 2008. 12 02 PM IST
Updated: Mon, Aug 04 2008. 12 02 PM IST
By Aiko Hayashi / Reuters
Tokyo: The Nikkei average fell 1.2% to a two-week closing low on Monday as carmakers slid on weak US auto sales data, with Nissan Motor also hit by a drop in profits.
“Global demand stocks such as Nippon Steel Corp slid along with automakers as investors moved away from stocks that reflect the state of the global economy to defensive issues,” said Takashi Kamiya, chief economist at T & D Asset Management.
“As the stock market moves to factor in a slowdown in the global economy, the focus is shifting to defensive stocks from stocks that mirror the global economy,” he said.
The benchmark Nikkei shed 161.41 points to end at 12,933.18, its lowest finish since 18 July. The broader Topix fell 1.9% to 1,248.25.
US auto sales plunged to a 16-year low in July, led by a 27% drop at General Motors Corp as high gas prices and tight credit sent the industry into a tailspin.
“The sharp drop in US auto sales is probably the biggest reason for the fall in auto stocks today,” said Yoshinori Nagano, chief strategist at Daiwa Asset Management.
“There’s a view that auto sales elsewhere will also fall because of increasing uncertainty about the world economy,” he said.
Trade was moderate on the Tokyo exchange’s first section, with 2.1 billion shares changing hands, compared with last week’s daily average of 1.8 billion. Declining stocks outpaced advancers by a ratio nearly 5 to 1.
Nissan skids
Toyota Motor lost 3.3% to 4,460 yen, hitting its lowest of the year, while Honda Motor declined 5.8% to 3,280 yen, the main drag on the Nikkei 225.
Toyota, whose July US sales fell 12%, last month cut its 2008 groupwide global sales forecast due to a pronounced downturn in the US market.
Nissan skidded 4.8% to 788 yen, after touching its lowest point for the year during morning trade. The company posted a 46% drop in quarterly operating profit, hit by decreased sales of large vehicles in the US market amid soaring gasoline prices.
Nippon Steel dropped 7.1% to 553 yen, while JFE Holdings Inc gave up 6.7% to 4,730 yen.
Mitsui & Co sank 8.6% to 1,956 yen, sharply extending losses after the trading house reported a 43% drop in first-quarter net profit and stuck to a full-year net profit forecast that is below analysts’ expectations.
Amid worries about the health of the global economy, stocks of a defensive nature gained popularity.
Fast Retailing Co Ltd the operator of the Uniqlo casual clothing chain, jumped 5.3% to 12,770 yen to become the biggest positive contributor to the Nikkei 225. The retailer was to report its July sales figures after the market closed.
Shares of drugmakers gained, with Takeda Pharmaceutical Co Ltd up 3.9% at 5,860 yen.
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First Published: Mon, Aug 04 2008. 12 02 PM IST
More Topics: Markets | Japan | Stocks | Nikkei | Topix |