International markets: Tokyo - Stocks face a triple whammy

Japanese stocks are likely to fall this week on pessimism over the struggling economy, the government's economic stimulus package, and the ailing financial system. Concern that financial institutions may have to sell bonds to make up for losses in equities will depress the bond market. "Concern over a 'triple-weakening' is strong," said Soichi Okuda, senior economist at Nippon Credit Bank.

The Nikkei index fell 4.8 per cent last week, dropping below the 15,000 level on Friday for the first time since July 1995. The Nikkei has fallen 22 per cent in the year to date. Even after the close, Nikkei 225 index futures traded in Singapore continued to fall, puncturing the 15,000 line to close at 14,940. The yield on the benchmark No 182 government bond rose 1.5 basis points to 1.635 per cent.

"The market is likely to trade in the 14,500 to 15,000 range," said Christophe Aurand, fund manager at Taiyo Life Gamma Asset Management. "Public and corporate pension funds may support the benchmark, but won't alleviate concerns about the market's health," he added.

The ruling Liberal Democratic Party released its second economic stimulus package in a month. The package lacked measures, such as income tax cuts or public works spending, that could quickly spur economic growth. The government will present a similar package next Tuesday, and investors are betting it will come short of the mark.

"It's like giving cold medicine to a cancer patient and telling him to get better," said Takashi Otsubo, vice president at Fuji Investment Management. "The government missed the chance to heal the economy before it was in such dreadful shape."

Banks are likely to continue to fall as investors shed financial issues from their portfolios amid concern about rating downgrades, bad loans and losses on equity holdings. The Topix banking index fell 4.16 per cent in the past five days.

IBCA, a European credit rating service, Thursday downgraded its ratings for Fuji Bank, Industrial Bank of Japan and Sakura Bank. It also placed Dai-Ichi Kangyo Bank, Sanwa Bank and Sumitomo Bank on watch for possible downgrades.

The downgrades raise the cost of borrowing for Japanese banks. The "Japan premium" - the charge Japanese banks incur when they borrow overseas - has soared amid Japan's fiscal crisis, doubling in four days.

Copyright: IOS & Bloomberg

Start your day with The Independent, sign up for daily news emails
News
ebookA unique anthology of reporting and analysis of a crucial period of history
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Guru Careers: Software Developer / C# Developer

£40-50K: Guru Careers: We are seeking an experienced Software / C# Developer w...

Neil Pavier: Management Accountant

£45,000 - £55,000: Neil Pavier: Are you looking for your next opportunity for ...

Sheridan Maine: Commercial Accountant

£45,000 - £55,000: Sheridan Maine: Are you a newly qualified ACA/ACCA/ACMA qua...

Laura Norton: Project Accountant

£50,000 - £60,000: Laura Norton: Are you looking for an opportunity within a w...

Day In a Page

Sun, sex and an anthropological study: One British academic's summer of hell in Magaluf

Sun, sex and an anthropological study

One academic’s summer of hell in Magaluf
From Shakespeare to Rising Damp... to Vicious

Frances de la Tour's 50-year triumph

'Rising Damp' brought De la Tour such recognition that she could be forgiven if she'd never been able to move on. But at 70, she continues to flourish - and to beguile
'That Whitsun, I was late getting away...'

Ian McMillan on the Whitsun Weddings

This weekend is Whitsun, and while the festival may no longer resonate, Larkin's best-loved poem, lives on - along with the train journey at the heart of it
Kathryn Williams explores the works and influences of Sylvia Plath in a new light

Songs from the bell jar

Kathryn Williams explores the works and influences of Sylvia Plath
How one man's day in high heels showed him that Cannes must change its 'no flats' policy

One man's day in high heels

...showed him that Cannes must change its 'flats' policy
Is a quiet crusade to reform executive pay bearing fruit?

Is a quiet crusade to reform executive pay bearing fruit?

Dominic Rossi of Fidelity says his pressure on business to control rewards is working. But why aren’t other fund managers helping?
The King David Hotel gives precious work to Palestinians - unless peace talks are on

King David Hotel: Palestinians not included

The King David is special to Jerusalem. Nick Kochan checked in and discovered it has some special arrangements, too
More people moving from Australia to New Zealand than in the other direction for first time in 24 years

End of the Aussie brain drain

More people moving from Australia to New Zealand than in the other direction for first time in 24 years
Meditation is touted as a cure for mental instability but can it actually be bad for you?

Can meditation be bad for you?

Researching a mass murder, Dr Miguel Farias discovered that, far from bringing inner peace, meditation can leave devotees in pieces
Eurovision 2015: Australians will be cheering on their first-ever entrant this Saturday

Australia's first-ever Eurovision entrant

Australia, a nation of kitsch-worshippers, has always loved the Eurovision Song Contest. Maggie Alderson says it'll fit in fine
Letterman's final Late Show: Laughter, but no tears, as David takes his bow after 33 years

Laughter, but no tears, as Letterman takes his bow after 33 years

Veteran talkshow host steps down to plaudits from four presidents
Ivor Novello Awards 2015: Hozier wins with anti-Catholic song 'Take Me To Church' as John Whittingdale leads praise for Black Sabbath

Hozier's 'blasphemous' song takes Novello award

Singer joins Ed Sheeran and Clean Bandit in celebration of the best in British and Irish music
Tequila gold rush: The spirit has gone from a cheap shot to a multi-billion pound product

Join the tequila gold rush

The spirit has gone from a cheap shot to a multi-billion pound product
12 best statement wallpapers

12 best statement wallpapers

Make an impact and transform a room with a conversation-starting pattern
Paul Scholes column: Does David De Gea really want to leave Manchester United to fight it out for the No 1 spot at Real Madrid?

Paul Scholes column

Does David De Gea really want to leave Manchester United to fight it out for the No 1 spot at Real Madrid?