Japan market summary for Tuesday (Oct. 30)
Nikkei 225 Stock Average: -47.07 (-0.3%) to 16,651.01
Nikkei 225 futures Osaka: -60 (-0.4%) to 16,670, Singapore (SGX) -45 (-0.3%) to 16,6806, Chicago (CME) *10/29 +90 (+0.5%) to 16,755
TOPIX: +0.72 (+0.0%) to 1,607.21; Advancers 857 x decliners 761 (unch. 105), New highs 12 x new lows 73; 19/33 sectors posted gains
Nikkei Jasdaq: -5.35 (-0.3%) to 1,860.17
Yen: weakened 0.5% against US$ to 114.70 level late in Tokyo; weakened 0.3% to 165.20 level against euro


Notes: Both the MOTHERS and HERCULES indices lost 0.8%.

The Nikkei closed down for the first time in three sessions. The TOPIX just barely extended its rally to a third day in heavy trading.

The Nikkei Shimbun reports a Credit Suisse report dated 10/29 recommended global investors lower their allocation to Japan, in effect causing a sell-off of Japanese stocks into the afternoon session Tuesday. However, stocks did rally back, on news the land ministry may ease construction approval regulations, and also apparently in anticipation of a positive outcome from the Fed’s rate decision meeting Wednesday — the BoJ also has a rate decision out Wed. and is widely expected to hold again at 0.5%. The TOPIX Construction index jumped 6.7% for its biggest single-day gain in 8-years. However, heavy selling of Takeda Pharma (see below) weighed on the benchmarks.

Among big gainers, Aozora Bank (JP: 8304) and Shinsei Bank (JP: 8303) both surged double-digits on news JP Morgan is eying acquisitions in Japan. A Morgan Stanley Japan banking analyst commented, “An acquisition is probably an effective way for a foreign bank to expand client base and gain franchise in Japan. Both Aozora and Shinsei have networks of high net-worth individuals who purchase the banks’ debentures. Their networks and branches can be very attractive to foreign firms.” (Bloomberg) Shares of both Aozora and Shinsei have taken a beating this year, especially Shinsei. At any rate, financial stocks did quite well across the board Tuesday.

Meanwhile, Takeda Pharma (JP: 4502) took a nose dive, -12% (limit-down) to Y7,060 on analyst downgrades, following an announcement the company is reviewing/delaying the development of an experimental drug.

The latest unemployment data showing a second consecutive monthly increase, to 4% in September, from 3.8% in August, was definitely a surprise, as most economists tend to believe (hopefully) that labor market tightness will lead to higher wages, thus driving consumer spending. In fact, household spending rose 3.2% in Sept. compared to a 6% drop last year, well ahead of the consensus estimate of +1.4%.