Japan stocks seen tumbling as credit worry spreads

Written by:
Subscribe to Oneindia News

Tokyo, Nov 22: Japanese stocks are seen tumbling on Thursday under the double punch of a Wall Street fall on economic worries and a strong yen, with exporters such as Canon Inc likely to be hit especially hard.

One stock to watch is Mitsubishi UFJ Financial Group Inc, Japan's largest bank, which posted a 49 percent drop in first-half profit on Wednesday, hit by subprime-related investments and hefty losses at its credit card unit.

U.S. stocks fell on Wednesday on signs that trouble in the housing market could worsen and further harm the economy, while fears grew that the impact of subprime mortgage losses may be larger next year.

The dollar fell to its lowest level against the yen in more than two years as investors pared back exposure to risky trades on credit worries and the health of the US economy, falling as low as 108.27 yen It was around 108.60 yen in early Asian trade.

''The Japanese market faces double trouble: the impact of the Wall Street fall, and the yen's gains,'' said Yutaka Miura, senior technical analyst at Shinko Securities.

''Technically, Japanese stocks are at a place where we could expect a rebound, especially in the short term. But unless the yen weakens and US stocks recover, the longer-term picture isn't so good.'' Japanese stocks are likely to fall sharply from the opening, with the Nikkei easily going below the 16-month low of 14,751.27 hit on Tuesday.

Short-covering is likely to emerge later in the day, led by the futures market and depending on what happens with the yen, with defensive stocks likely to do well.

The Nikkei is expected to move between 14,500 and 14,900, with trade thinned by the U.S. Thanksgiving holiday on Thursday and a Japanese holiday on Friday.

The benchmark ended Wednesday trade at 14,837.66, a loss of 2.5 percent or 373.86 points, its lowest close since July 2006.

The broader TOPIX index was down 2.1 percent at 1,438.72, its lowest close since Oct 2005.

Nikkei futures traded in Chicago closed at 14,705.00 compared with 14,690 at the Osaka close The Dow Jones industrial average fell 211.10 points or 1.62 percent to end at 12,799.04, its lowest close since April.

The Standard&Poor's 500 Index was down 22.93 points or 1.59 percent at 1,416.77, a drop that pushed it into negative territory for 2007.

The Nasdaq Composite Index was down 34.66 points or 1.33 percent to close at 2,562.15.


Mitsubishi UFJ Financial Group Inc T> Japan's largest bank posted a 49 percent drop in first-half profit on Wednesday, hit by subprime-related investments and hefty losses at its credit card unit.

-- Matsushita Electric Industrial Co T> Panasonic-brand maker Matsushita Electric Industrial Co said it aims for double-digit growth in overseas sales in the crucial October-December quarter on brisk demand for plasma TVs and DVD recorders, with its managing director telling Reuters it also aims to market washing machines and refrigerators in Europe in the year starting in April.

-- Sumitomo Corp Sumitomo, Japan's third-biggest trading company, said on Wednesday it aimed to take a stake in the huge Elga coal mine in Russia to secure a stable supply of thermal and coking coal.


Please Wait while comments are loading...