31 Aug 2009
Aug. 31 (Bloomberg) -- The yen strengthened after the Democratic Party of Japan won yesterday's national election, marking an end to single-party government that lasted almost unbroken for half a century. Japanese exporters of cars and electronics declined in stock trading.The yen appreciated to 132.47 per euro as of 11:59 a.m. in Tokyo from 133.85 in New York on Aug. 28, and strengthened to 92.67 per dollar from 93.60. The Nikkei 225 Stock Average fell 0.4 percent to 10,497.19 at the 11 a.m. break on the Tokyo Stock Exchange, reversing an earlier gain of 2.2 percent. Bonds rose.
"Some are saying the market has fully reflected the change of government, but the change is too big to be priced in," said Hisakazu Amano, who helps oversee the equivalent of $18 billion at T&D Asset Management Co. "The impact of the DPJ victory on company earnings is still uncertain and investors can't decide what to buy or sell."
Honda Motor Co., which gets more than half its sales in North America, slid 1.7 percent. Canon Inc., the world's biggest maker of digital cameras, dropped 3 percent. J Front Retailing Co., Japan's No. 2 department-store operator, jumped 2.3 percent.
The Nikkei is on course for a 1.4 percent gain in August for a sixth monthly increase, the longest stretch of gains since the nine months ended January 2006.
The DPJ routed the Liberal Democratic Party in yesterday's vote, capturing 308 of 480 lower-house seats, national broadcaster NHK said. The DPJ has pledged to revive an economy emerging from its deepest recession since World War II by boosting child-care spending, cutting taxes and limiting the power of bureaucrats.
Cars, Electronics
The broader Topix index of equities dropped 0.3 percent to 966.09 today, with about four stocks retreating for three that advanced.
Honda, Japan's No. 2 automaker retreated 1.7 percent to 2,940 yen. Canon, which gets a third of its sales from the Americas, dived 3 percent to 3,580 yen. Manufacturers of cars and electronics contributed the most to the Topix's decline.
A tumble in Chinese equities damped investor sentiment. The Shanghai Composite Index slumped 5.4 percent, set for the lowest close since May 27.
J Front rose 2.3 percent to 525 yen. Aeon Co., Japan's largest supermarket operator, added 1.2 percent. Round One Corp., which operates bowling alleys, climbed 2.9 percent after Mitsubishi UFJ Financial Group Inc. gave its highest rating to the stock.
"If the DPJ's proposed measures to bolster household income lift consumer spending, it will make an economic recovery more certain," said Ryuta Otsuka, a strategist at Toyo Securities Co. in Tokyo.
Government Bonds
Japan's retail sales fell less than economists had estimated last month, a report from the Trade Ministry showed this morning. Monthly wages dropped for a 14th month in July, the Labor Ministry said today.
Japanese government bonds rose, with the yield on the 1.5 percent bond due June 2019 falling 1.5 basis points to 1.295 percent at the 11:05 a.m. morning close in Tokyo.
