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
  • Get to the point
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

Recruitment Genius: Claims Administrator

£16000 - £18500 per annum: Recruitment Genius: This is an excellent opportunit...

Recruitment Genius: Senior SEO Executive

£24000 - £28000 per annum: Recruitment Genius: A Senior SEO Executive is requi...

Recruitment Genius: Online Customer Service Administrator

£16000 - £18000 per annum: Recruitment Genius: An Online customer Service Admi...

Recruitment Genius: Digital Marketing Executive

£18000 - £22000 per annum: Recruitment Genius: This global, industry leading, ...

Day In a Page

'It was first time I had ever tasted chocolate. I kept a piece, and when Amsterdam was liberated, I gave it to the first Allied soldier I saw'

Bread from heaven

Dutch survivors thank RAF for World War II drop that saved millions
Britain will be 'run for the wealthy and powerful' if Tories retain power - Labour

How 'the Axe' helped Labour

UK will be 'run for the wealthy and powerful' if Tories retain power
Rare and exclusive video shows the horrific price paid by activists for challenging the rule of jihadist extremists in Syria

The price to be paid for challenging the rule of extremists

A revolution now 'consuming its own children'
Welcome to the world of Megagames

Welcome to the world of Megagames

300 players take part in Watch the Skies! board game in London
'Nymphomaniac' actress reveals what it was really like to star in one of the most explicit films ever

Charlotte Gainsbourg on 'Nymphomaniac'

Starring in one of the most explicit films ever
Robert Fisk in Abu Dhabi: The Emirates' out-of-sight migrant workers helping to build the dream projects of its rulers

Robert Fisk in Abu Dhabi

The Emirates' out-of-sight migrant workers helping to build the dream projects of its rulers
Vince Cable interview: Charging fees for employment tribunals was 'a very bad move'

Vince Cable exclusive interview

Charging fees for employment tribunals was 'a very bad move'
Iwan Rheon interview: Game of Thrones star returns to his Welsh roots to record debut album

Iwan Rheon is returning to his Welsh roots

Rheon is best known for his role as the Bastard of Bolton. It's gruelling playing a sadistic torturer, he tells Craig McLean, but it hasn't stopped him recording an album of Welsh psychedelia
Russell Brand's interview with Ed Miliband has got everyone talking about The Trews

Everyone is talking about The Trews

Russell Brand's 'true news' videos attract millions of viewers. But today's 'Milibrand' interview introduced his resolutely amateurish style to a whole new crowd
Morne Hardenberg interview: Cameraman for BBC's upcoming show Shark on filming the ocean's most dangerous predator

It's time for my close-up

Meet the man who films great whites for a living
Increasing numbers of homeless people in America keep their mobile phones on the streets

Homeless people keep mobile phones

A homeless person with a smartphone is a common sight in the US. And that's creating a network where the 'hobo' community can share information - and fight stigma - like never before
'Queer saint' Peter Watson left his mark on British culture by bankrolling artworld giants

'Queer saint' who bankrolled artworld giants

British culture owes a huge debt to Peter Watson, says Michael Prodger
Pushkin Prizes: Unusual exchange programme aims to bring countries together through culture

Pushkin Prizes brings countries together

Ten Scottish schoolchildren and their Russian peers attended a creative writing workshop in the Highlands this week
14 best kids' hoodies

14 best kids' hoodies

Don't get caught out by that wind on the beach. Zip them up in a lightweight top to see them through summer to autumn
Robert Fisk in Abu Dhabi: The acceptable face of the Emirates

The acceptable face of the Emirates

Has Abu Dhabi found a way to blend petrodollars with principles, asks Robert Fisk