Japanese market trades lower on profit-taking

on March 24 2009 9:12 PM

The Japanese stock market was trading lower on Wednesday following the strong gains posted in the recent sessions and on the back of negative cues from Wall Street overnight.

In early morning trades, the benchmark Nikkei 225 Index was losing 62.60 points or 0.74% to 8,425.70.

Overnight, U.S. stocks moved back to the downside, partly offsetting the standout gains posted in the previous session. While profit taking contributed to some weakness in the markets, selling pressure remained relatively subdued, helping the major averages to hold onto the bulk of Monday's gains.

Crude oil closed modestly lower on Tuesday, but rebounded off of its lows of the session. Traders looked ahead to Energy Information Administration data, which is expected to show another build in inventories. Light sweet crude for May delivery fell $0.18 to end at $53.92 per barrel.

The Japanese market closed higher on Tuesday on optimism that the Obama administration's plan to help banks sell toxic assets will pave the way for a revival in credit flow and ultimately revive the global banking sector. The Nikkei 225 Index ended 272.77 points or 3.32% higher at 8,488.30 and the Topix Index gained 21.16 points or 2.7% to close at 812.70.

On the economic front, the Ministry of Finance said on Wednesday that Japan posted a merchandise trade balance of 82.4 billion yen in February, compared to expectations for a 13.7 billion yen deficit following a 956.9 billion yen shortfall in January. Exports during February plummeted by a record 49.9% on year, the data showed, while imports fell 43.0% on year to 3.443 trillion yen.

In the currency market, the U.S. dollar was trading in the upper 97 yen-range on Wednesday. In early morning trades, the dollar was quoted in a range of 97.97-98.00 yen, down 0.31 yen from Tuesday's close of 98.28-98.31 yen in Tokyo.

Banking stocks are trading mixed. Mitsubishi UFJ, Japan's biggest bank, is down 0.19%. Mitsubishi UFJ will likely take a 60% stake in a brokerage it plans to create with Morgan Stanley through the merger of their brokerage subsidiaries in Japan, the Nikkei business daily reported Tuesday.

Meanwhile, Sumitomo Mitsui is gaining 0.77% and Mizuho Financial is unchanged. Resona Holdings is adding 1.42%. Shinsei Bank is declining 2.63% despite the lender saying it will raise 48.2 billion yen by issuing preferred securities in the current month as it seeks to bolster its capital base. Brokerage Nomura Holdings is down 0.54%.

Exporters are declining on the back of a stronger yen. Canon is losing 0.52%, Sharp is down 1.67% and Sony is edging down 0.24%. Automaker Toyota is easing 0.63% and Honda is down 1.7%.

Oil-related stocks are trading mostly lower following the decline in crude oil price overnight. Inpex is losing 1.64% and Showa Shell is easing 0.11%, while Nippon Oil is adding 1.54%. Meanwhile, trading house Mitsubishi Corp. is up 0.80% and Sumitomo Corp. is adding 0.44%, while Itochu is losing 0.58%.

Electronics maker Sanyo Electric Co. warned of a 90 billion yen net loss for the year ending March 2009, hurt by a worsening global recession. This compares to its earlier forecast that it would breakeven. The company's stock is down 1.44%.

Sanyo Electric's peer Toshiba is declining 1.47%. The company, facing its biggest-ever annual loss in the current year, will sell a former factory site in Japan to Nomura Real Estate Holdings for 22 billion yen by the end of March. The company noted that the sale will generate a pretax profit of 14.2 billion yen, but will not change its earnings forecast for the year to March 31.

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