Tokyo Market: Exporters fear rise in US interest rates

JAPAN'S benchmark stock average could fall this week to 15,500, as the possibility of a slowdown in the US economy threatens sales of Japanese firms that export there.

Exporters such as Sony and Toyota may fall on concern that US economic growth could trigger a rise in interest rates. Both rely on the US for more than a third of sales. "The key question for global equity markets, including Japan, is what will happen to the US markets," said Chua Soon Hock, strategist at Sanwa Bank.

The Nikkei closed below 16,000 on Friday for the first time since March, ending at 15,972.68, down 2 per cent for the week.

Exporters could also fall because of a decline in the value of the dollar, which has sunk 2.1 per cent in the last five days against the yen.

Other companies that could move include those which reported earnings late on Friday. Sega Enterprises said it could post its third straight loss next year. It made its worst-ever loss this year as it wrote off inventory, its arcade business slumped and the Dreamcast home console made a lacklustre debut.

Government bonds are likely to fall as unemployment stirs investor concern that the government will sell more debt to fund spending to tackle the problem. Finance minister Kiichi Miyazawa said the government will spend "whatever's necessary" to boost employment. The jobless rate will probably reach a post-war high of 4.9 per cent in April, up from 4.8 per cent in March.

"I'm seeing a weak demand for long-term bonds because people are concerned about additional budgets," said Yasunori Kuroda, a fund manager at Yasuda Kasai Global Asset Management.

Last week, the benchmark government bond yield rose 11 basis points to 1.460 per cent. "The recent bull trend has pretty much finished," said Xinyi Lu at Paribas Capital Markets. "Talk of a supplementary budget will get more serious." City banks have been sellers over the past few days.

Even so, some investors are still looking for an opportunity to buy when bonds decline on the hunch that the government won't draft a large supplementary budget. They expect the Bank of Japan to arrest any rise in long-term interest rates by continuing to provide ample funds to the banking system. "Yields near 1.6 per cent look like a good level to buy," said Masahiro Kami, chief fund manager at SB Investment Management. "As long as short- term rates are low, long-term yields won't jump."

Start your day with The Independent, sign up for daily news emails
PROMOTED VIDEO
ebooks
ebooksA year of political gossip, levity and intrigue from the sharpest pen in Westminster
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

Selby Jennings: Oil Operations

Highly Competitive: Selby Jennings: Our client, a leading European Oil trading...

The Jenrick Group: Night Shift Operations Manager

£43500 per annum + pension + holidays: The Jenrick Group: Night Shift Operatio...

SThree: Trainee Recruitment Consultant - LONDON

£20000 - £25000 per annum + OTE £40,000 + Car + Pension: SThree: SThree are a ...

SThree: Trainee Recruitment Consultant

£20000 - £25000 per annum + OTE £35K: SThree: We consistently strive to be the...

Day In a Page

Isis in Iraq: Yazidi girls killing themselves to escape rape and imprisonment by militants

'Jilan killed herself in the bathroom. She cut her wrists and hanged herself'

Yazidi girls killing themselves to escape rape and imprisonment
Ed Balls interview: 'If I think about the deficit when I'm playing the piano, it all goes wrong'

Ed Balls interview

'If I think about the deficit when I'm playing the piano, it all goes wrong'
He's behind you, dude!

US stars in UK panto

From David Hasselhoff to Jerry Hall
Grace Dent's Christmas Quiz: What are you – a festive curmudgeon or top of the tree?

Grace Dent's Christmas Quiz

What are you – a festive curmudgeon or top of the tree?
Nasa planning to build cloud cities in airships above Venus

Nasa planning to build cloud cities in airships above Venus

Planet’s surface is inhospitable to humans but 30 miles above it is almost perfect
Surrounded by high-rise flats is a little house filled with Lebanon’s history - clocks, rifles, frogmen’s uniforms and colonial helmets

Clocks, rifles, swords, frogmen’s uniforms

Surrounded by high-rise flats is a little house filled with Lebanon’s history
Return to Gaza: Four months on, the wounds left by Israel's bombardment have not yet healed

Four months after the bombardment, Gaza’s wounds are yet to heal

Kim Sengupta is reunited with a man whose plight mirrors the suffering of the Palestinian people
Gastric surgery: Is it really the answer to the UK's obesity epidemic?

Is gastric surgery really the answer to the UK's obesity epidemic?

Critics argue that it’s crazy to operate on healthy people just to stop them eating
Homeless Veterans appeal: Christmas charity auction Part 2 - now LIVE

Homeless Veterans appeal: Christmas charity auction

Bid on original art, or trips of a lifetime to Africa or the 'Corrie' set, and help Homeless Veterans
Pantomime rings the changes to welcome autistic theatre-goers

Autism-friendly theatre

Pantomime leads the pack in quest to welcome all
The week Hollywood got scared and had to grow up a bit

The week Hollywood got scared and had to grow up a bit

Sony suffered a chorus of disapproval after it withdrew 'The Interview', but it's not too late for it to take a stand, says Joan Smith
From Widow Twankey to Mother Goose, how do the men who play panto dames get themselves ready for the performance of a lifetime?

Panto dames: before and after

From Widow Twankey to Mother Goose, how do the men who play panto dames get themselves ready for the performance of a lifetime?
Thirties murder mystery novel is surprise runaway Christmas hit

Thirties murder mystery novel is surprise runaway Christmas hit

Booksellers say readers are turning away from dark modern thrillers and back to the golden age of crime writing
Anne-Marie Huby: 'Charities deserve the best,' says founder of JustGiving

Anne-Marie Huby: 'Charities deserve the best'

Ten million of us have used the JustGiving website to donate to good causes. Its co-founder says that being dynamic is as important as being kind
The botanist who hunts for giant trees at Kew Gardens

The man who hunts giants

A Kew Gardens botanist has found 25 new large tree species - and he's sure there are more out there