Weekly Market Report 1

Good morning,

So here I am, writing my first weekly market report of 2009. From now on, every Monday I will have a post on the Nikkei225 performance the previous week as well as a short review of the most important financial news that affected the Japanese equity market.  Enjoy your reading!!!

We just ended the first trading week of the year on the Japanese financial markets and we saw some interesting sector rotations.  On the week the Nikkei225 lost 0,3% in a very volatile market once again. The Nikkei started the week on a strong note but lost all its gain on Thursday and Friday ahead of the release of important US economic data, the non farm payrolls for the month of December and the unemployment rate.  The jobs data released Friday showed the US economy is falling fast with more than 500 000 more lay off in December.  The unemployment rose to 7,2% the highest since 1983 and is now expected to hit double digit in 2009, which should help President Obama to put more pressure on the US Senate to pass the $775 billion stimulus package.  Going back to the Japanese equity market, the performance of the Nikkei225 should be left aside and we should pay more attention at the performance sector by sector. Investors seem to turn more positive when looking at 2009 as there were many sector rotations this week, principally cyclical stocks being favoured over more defensive stocks like food, pharmaceutical or utilities sectors. 

The automobile sector was one of the big gainer on the week. Investors did not pay attention to the very weak US December sales release on Tuesday (Toyota -37%, Honda -35% and Nissan -30%) as they preferred to focus on the possible recovery of that industry in the second half of 2009 as many strategists believe in.  On Friday, Nissan indicated they would lay off 1200 employees in the UK to respond to the sharp drop of the demand for car.  The machinery sector rebounded sharply too, investors betting on the rebound of the sector following the multiple announcement for infrastructure stimulus from China, Europe and the United States.

The consumer electronic companies got a boost from the Consumer Electronic Show 2009, in Las Vegas, where all the big Japanese TV makers like Sony (14%), Panasonic (8%), and Sharp (30%) were unveiling their new technologies and products.  On the negative side, Panasonic said it will slash spending on flat panel TV for the next three years by 135 billion yen to 445 billion yen ($4,88 billion).  Panasonic, however, still expects an increase of 50% of unit TV sales in the next 12 months ending March 2010 by expanding its range of cheaper, entry level model as reported in Saturday’s Wall Street Journal newspaper.

On the other hand, chip makers had a rough week after a very strong start on Monday they were hit hard by the profit warning from Intel on Wednesday.  Intel said fourth-quarter sales dropped 23 percent, more than it projected, as the global recession stifled demand for personal computers. As a result, we can fear a very bad upcoming earning season for chip makers with a possibility of more profit warning. On the week Advantest lost 0,5% while Tokyo Electron managed to gain 7,5%.

The commodity related stocks, once again, followed the oil price.  Oil jumped to more than $50 a barrel in NY on Monday, well off the $35 low of December, investors worrying that the conflict in Gaza would last much longer than expected.  However, oil price moved back down sharply from Wednesday on after a glut in US crude-oil inventories.  Weak demand has caused crude-oil inventories to swell, adding downward pressure on near-term prices. As a result, Inpex (-0,1%) and Nippon Oil (-1,1%) finished the week in the red while the trading companies, like Mitsubishi Corp (8,4%) or Mitsui & Co (9,7%),  were able to hold on their early gains.

The week ahead should be important for investors.  A failure to maintain the positive momentum in the market could bring another wave of selling orders from investors.  The start of the week should be again volatile after the lower close in NY on Friday.  US markets dropped on Friday just before the closing bell after Robert Rubin announced his retirement from Citigroup.  On top of that Citigroup announced it had entered discussions to spin-off its Smith Barney brokerage unit with Morgan Stanley, reviving fears that there could be more write downs ahead for the US financial institution.

Have a good week

Ticker Bloom	NAME	SECTEUR	weekly % move
6773 JP	Pioneer Corp	Consumer Technology	34,97%
6753 JP	Sharp Corp	Consumer Technology	30,03%
7202 JP	Isuzu Motors	Auto & Autoparts	25,66%
6952 JP	Casio Computer	Technology	23,97%
9737 JP	CSK holdings	Construction	20,25%
7261 JP	Mazda Corp	Auto & Autoparts	20,13%
5802 JP	Sumitomo Electric	Auto & Autoparts	19,35%
6305 JP	Hitachi Construction Machinery	Machinery	18,02%
7270 JP	Fuji Heavy Industries	Auto & Autoparts	17,99%
6367 JP	Daikin Industries	Machinery	16,41%
5333 JP	NGK Insulators	Technology	16,21%
	Nikkei	Index	-0,26%
9433 JP	KDDI	Telecom	-11,34%
8270 JP	Uny Co	Retail	-11,84%
4543 JP	Terumo	Pharmaceutical	-12,47%
1803 JP	Shimizu Corp	Construction	-12,50%
3861 JP	Oji Paper	Paper	-12,57%
5711 JP	Mitsubishi Paper	Paper	-12,80%
4507 JP	Shionogi	Pharmaceutical	-13,03%
9766 JP	Konami	Games	-14,47%
3865 JP	Hokuetsu Paper	Paper	-14,65%
3893 JP	Nippon Paper	Paper	-19,41%