unexpected increase in Chinese interest rates sent Tokyo stocks lower on Friday morning as investors fretted about the impact on Japanese companies.
Worries over China’s rates hit Tokyo stocks
By Barney Jopson in Tokyo
Published: October 29 2004 06:27 | Last updated: October 29 2004 06:27
An unexpected increase in Chinese interest rates sent Tokyo stocks lower on Friday morning as investors fretted about the impact on Japanese companies.
The Nikkei 225 average was trading down 0.9 per cent at 10,762.05 by early afternoon while the Topix index was off 0.6 per cent at 1,083.78.
Like financial markets around the world, Tokyo was caught off guard by the Chinese central bank’s move to raise interest rates for the first time in nine years.
The move, seen as a means of cooling rapid economic growth, sparked fears that Japanese exporters would be hit by contracting demand.
“Almost nobody was expecting this and the market seems to be having difficulty in working out how to discount the news,” said Shinichi Ichikawa, strategist at Credit Suisse First Boston in Tokyo. “The most important thing is that this doesn’t seem to be the final hike.”
Iron and steelmakers were hit hardest having racked up huge profits in the past year by supplying China’s hunger for materials. Nippon Steel fell 2.7 per cent to Y249, Kobe Steel dropped 2 per cent to Y149 and JFE was off 3.3 per cent at Y2,820. Chemicals group and electrical equipment makers also fell.
Sony gained 0.3 per cent to Y3,700 having revealed a 31 per cent rise in quarterly profit attributed largely to strong sales of Spider Man 2, the movie. Matsushita rose 1.4 per cent to Y1,538 after reporting a more broad-based 143 per cent gain in half-year net profit.
NEC dropped 4.3 per cent Y583 after cutting its full-year profit forecast on Thursday due to slumping mobile phone sales.
Nomura, Japan’s biggest broker, plunged 4.3 per cent to Y1,300 the day after reporting a steep 93 per cent decline in quarterly profit blamed on a stagnant equity market. |
