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Stocks Fall, Dollar Higher

July 29, 1992

TOKYO (AP) _ Continued pessimism about Japan’s economy sent share prices on the Tokyo Stock Exchange tumbling to this year’s lowest level today. The dollar finished higher against the Japanese yen.

The 225-issue Nikkei Stock Average shed 330.69 points, or 2.14 percent, closing at 15,095.95 points, its lowest close for the year. The previous low was set Monday, when the average finished at 15,373.34.

On Tuesday, the average gained 53.30 points, or 0.35 percent, to end a two- day slide that had brought it to a six-year low.

The Tokyo Stock Price Index of all issues listed on the first section was down 19.48 points, or 1.64 percent, to 1,170.93. The TOPIX shed 3.53 points, or 0.29 percent, on Tuesday.

An estimated 250 million shares changed hands, up from Tuesday’s 166 million shares. Declining issues outnumbered advances 851 to 116, with 119 issues remained unchanged. The Nikkei average was moderately higher in the early session following an overnight 51.87-point rally in the Dow Jones industrial average, but weakening futures dragged the market down.

Driven by arbitrage selling, the average moved as low as 15,024 points at one point in the afternoon.

″Only a few investors have the confidence to buy,″ said Yoshiaki Makishima, an analyst with Sanyo Securities. ″People in the private sector are worried that the government is taking an overly optimistic outlook about the economy.″

A government report released Tuesday said that Japan’s economy will pick up in the latter half of the fiscal year that began April 1.

Makishima said ailing supermarket sales and slower-than-expected inventory adjustment among manufacturing firms were slowing the economic recovery. Corporate earnings are predicted to be low overall.

″Corporate investors are becoming very cautious,″ said Mitsuhiro Nakano, a senior strategist with Daiwa Institute of Research, which is affiliated with Daiwa Securities.

Analysts say institutional investors will continue to avoid shifting funds into the stock market as long as the possibility of further declines remains.

In currency trading, the dollar closed at 127.98 yen, up 0.63 yen from Tuesday’s close. After opening at 127.37 yen, it ranged from 127.28 yen to 127.98 yen.

Spot trading totaled $5.88 billion, down from Tuesday’s $6.25 billion.

There was some initial yen buying, but the fall in share prices prompted traders to buy the German mark against yen, pushing the dollar up against the yen.

Hiroyuki Murase, a dealer with the Bank of America, said the mark is likely to remain strong over the next month or so due to high interest rates in Germany.

Murase said, however, fears among traders about a central bank intervention will limit the dollar’s upswing against the yen.

The benchmark No. 129 10-year Japanese government bonds finished at 108.28 points, up from Tuesday’s 108.31-point finish. Their yield fell to 4.905 percent from 4.900 percent.

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