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Japan stocks tumble after unexpected Fed move
Source: Agencies |
February 19, 2010, Friday
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JAPANESE stocks tumbled today as investors nervously digested the Federal Reserve's decision to raise interest rates for emergency bank loans.
The benchmark Nikkei 225 stock average fell 212.11 points, or 2.1 percent, to 10,123.58 in a broad retreat. The Nikkei ended the week virtually flat, up 0.3 percent.
The broader Topix index lost 1.7 percent to 889.08, tracking a regional slump that also hit Hong Kong, South Korea and Singapore.
The Fed took markets by surprise yesterday when it announced plans to lift the "discount" lending rate by one-quarter point to 0.75 percent, part of a pullback of the extraordinary aid it offered to fight the financial crisis. The move, however, triggered fears that growth might slow in the United States, the world's largest economy and a key trading partner for Japan.
No sector was immune from the pessimism, which sent the dollar higher and commodities and US stock futures lower. Trading house Mitsui & Co. shed 3.2 percent to 1,352 yen (US$---), while Itochu Corp. finished down 3 percent at 701 yen.
Toyota Motor Corp. fell 1.8 percent to 3,300 yen after the company's president said he will testify next week at a US congressional hearing about its recent recalls. The announcement came just two days after Akio Toyoda said he wasn't going and follows an onslaught of criticism from both the Western and Japanese media about his reluctance to travel to Washington.
Kurt Sanger, an auto analyst at Deutsche Securities in Tokyo, estimates that Toyota's bottom line will take a 290 billion yen hit next fiscal year because of the recalls. He reiterated a "hold" rating on the issue but lowered its target price to 4,000 yen from 4,400 yen.
"We expect Toyota to respond aggressively to win back much of its lost market share, but it will come at a cost," Sanger said.
Today was the last day of trading for Japan Airlines Corp., which filed for bankruptcy last month and will be delisted tomorrow, wiping out investors. The issue remained ask-only at 1 yen for much of the last three sessions.
In currencies, the dollar strengthened to 91.89 yen from 90.75 yen late yesterday. The euro fell to US$1.3474 from US$1.3529.
The benchmark Nikkei 225 stock average fell 212.11 points, or 2.1 percent, to 10,123.58 in a broad retreat. The Nikkei ended the week virtually flat, up 0.3 percent.
The broader Topix index lost 1.7 percent to 889.08, tracking a regional slump that also hit Hong Kong, South Korea and Singapore.
The Fed took markets by surprise yesterday when it announced plans to lift the "discount" lending rate by one-quarter point to 0.75 percent, part of a pullback of the extraordinary aid it offered to fight the financial crisis. The move, however, triggered fears that growth might slow in the United States, the world's largest economy and a key trading partner for Japan.
No sector was immune from the pessimism, which sent the dollar higher and commodities and US stock futures lower. Trading house Mitsui & Co. shed 3.2 percent to 1,352 yen (US$---), while Itochu Corp. finished down 3 percent at 701 yen.
Toyota Motor Corp. fell 1.8 percent to 3,300 yen after the company's president said he will testify next week at a US congressional hearing about its recent recalls. The announcement came just two days after Akio Toyoda said he wasn't going and follows an onslaught of criticism from both the Western and Japanese media about his reluctance to travel to Washington.
Kurt Sanger, an auto analyst at Deutsche Securities in Tokyo, estimates that Toyota's bottom line will take a 290 billion yen hit next fiscal year because of the recalls. He reiterated a "hold" rating on the issue but lowered its target price to 4,000 yen from 4,400 yen.
"We expect Toyota to respond aggressively to win back much of its lost market share, but it will come at a cost," Sanger said.
Today was the last day of trading for Japan Airlines Corp., which filed for bankruptcy last month and will be delisted tomorrow, wiping out investors. The issue remained ask-only at 1 yen for much of the last three sessions.
In currencies, the dollar strengthened to 91.89 yen from 90.75 yen late yesterday. The euro fell to US$1.3474 from US$1.3529.
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