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Nikkei down 1.6% as US economy, oil worry weigh

Nikkei down 1.6% as US economy, oil worry weigh
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First Published: Mon, Jun 09 2008. 12 04 PM IST
Updated: Mon, Jun 09 2008. 12 04 PM IST
Reuters
Tokyo: Japan’s Nikkei average fell 1.6%, paring earlier losses though selling was seen across the board as record oil prices and the biggest jump in the US jobless rate in 22 years revived worry over the economic outlook.
The benchmark Nikkei shed 237.19 points to 14,252.25 after losing as much as 2.6% to hit a weeklong low in the morning session.
The broader TOPIX shed 1.7% or 24.04 points to 1,404.07.
Exporters such as Canon Inc slid on a stronger yen, while financial stocks, including top lender Mitsubishi UFJ Financial Group, slid after their U.S counterparts fell on renewed worries that the U.S. economy could face 1970s-style stagflation.
One of the few bright spots was oil and gas field developer Inpex Holdings Inc, which benefits from higher oil prices.
Soichiro Monji, chief strategist of the equity management department at Daiwa SB Investments, said a tumble on Wall Street pressured Japanese stocks, particularly hitting exporters, but falls appeared likely to be limited.
“One reason is that foreign investors are picking up Japanese stocks as they see them as laggards. This was indicated by orders by foreign securities houses before the market opening,” he said.
“Another reason is that US stocks fell on poor jobs data and high oil prices on Friday, but investors bet a 400 point fall in the Dow was overdone, considering other economic data out last week was not that bad.”
Orders for Japanese stocks placed through 13 foreign securities houses before the start of trade on Monday had shown an intention to buy a net 7.3 million shares.
In their biggest one-day jump ever, oil prices soared $11 to a new record of more than $139 a barrel on 6 June, sparking the largest single-day sell-off on Wall Street since February 2007. The Dow Jones industrial average lost 394.64 points or 3.13% to end at 12,209.81.
The US unemployment rate posted its steepest one-month rise in 22 years, figures on Friday showed, increasing fears of a replay of the 1970s when a spike in inflation coincided with a period of stagnant economic growth.
Exporters, banks hit
Blue-chip exporters were undercut by a slightly stronger yen against the dollar as a strong yen curbs their overseas’ profits when they are brought back home.
Canon fell 3.9% to 5,480 yen, becoming one of the top drags on the Nikkei 225. Industrial robot maker and fellow exporter Fanuc lost 3.3% to 11,310 yen and Honda Motor Co dropped 3.6% to 3,720 yen.
Financials also took a beating, with the securities subindex ISECU.down 4.2%, the worst performer among the subindices. The banking subindex IBNKS.fell 2.7%.
Shares of Mitsubishi UFJ slid 3.3% to 1,088 yen, No.2 Mizuho Financial Group shed 2.1% to 565,000 yen and Sumitomo Mitsui Financial Group, the third-largest bank, declined 2.9% to 910,000 yen.
Inpex climbed 3.9% to 1.35 million yen and oil explorer AOC Holdings jumped 7.6% to 1,482 yen.
One notable stock was Goldwin Inc, a sportswear company that makes and sells Speedo products in Japan.
The stock soared 24.5% to 305 yen after Japan’s Kosuke Kitajima, who is contracted to sportswear firm Mizuno, set a world record in the men’s 200 metres breaststroke on Sunday, wearing a swimsuit made by British firm Speedo.
World records have tumbled over the last few months, almost all by swimmers wearing Speedo’s LZR suits, which the British company says reduces drag, muscle oscillation and skin vibration.
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First Published: Mon, Jun 09 2008. 12 04 PM IST