naked capitalism

Normally I don’t go for intra-day fever charts, and the Nikkei was down considerably on Friday before rallying and winding up in positive territory. Nevertheless, the current state of play gives cause for pause:

Update 3:00 AM. Yikes:

That’s down nearly 4%. Back to the original post:

The related Bloomberg story attributes the decline to the prospect of global recession and the lack of enthusiasm for the Bush fiscal stimulus plan:

Asian stocks fell, led by heavy engineering companies and automakers, on speculation U.S. President George W. Bush’s economic plan won’t prevent the world’s biggest economy from entering a recession.

Hyundai Heavy Industries Co. and Komatsu Ltd. paced declines by shipbuilders and machinery makers on concern new orders will fall if global growth slows. Toyota Motor Corp., which counts North America as its biggest market, dropped to the lowest in more than two years.

“Investors are disappointed with Bush’s economic policy,” said Kiyoshi Ishigane, who helps oversee $61 billion in assets at Mitsubishi UFJ Asset Management Co. in Tokyo.

The MSCI Asia Pacific Index lost 2.2 percent to 143.52 at 11:16 a.m. in Tokyo, adding to a 7 percent decline this year. All 10 industry groups fell and all Asian benchmarks retreated.

Japan’s Nikkei 225 Stock Average dropped 3.4 percent to 13,395.28, while the broader Topix slid 3 percent. Australia’s S&P/ASX 200 Index extending its longest sell-off in a quarter of a century.

The Standard & Poor’s 500 Index completed its worst weekly decline in five years after Bush called for a plan on Jan. 18 that offers corporate investment incentives and personal tax rebates. The U.S.-based Conference Board reported on the same day that its index of leading economic indicators fell 0.2 percent in December, the third consecutive drop.

Bush didn’t offer specifics on a stimulus plan, saying he wants to reach an agreement with Congress.

“The reaction from U.S. stock markets showed Bush’s economic plan didn’t meet investors’ expectations,” Toshihiko Matsuno, a market analyst at SMBC Friend Securities Co. in Tokyo, said in an interview.

Update 3:00 AM. Yen rallies also reliably put the Nikkei in a downdraft,and that is also operative today. From Bloomberg:

The yen strengthened against 13 of the 16 most-active currencies as rising concern the U.S. is headed for recession prompted investors to sell higher-yielding assets funded by loans made in Japan.

The Japanese currency gained the most versus the South African rand and approached the strongest since May 2005 against the dollar on speculation a report this week will show sales of existing homes in the U.S. fell in December, capping the biggest yearly slump in almost a generation. The yen is the best performing major currency this year as global stock markets have slumped on concern losses tied to U.S. mortgages are mounting.

“Amid the subprime turmoil, speculators will still remain aggressive in buying the yen,” said Michiyoshi Kato, a senior vice president of currency sales in Tokyo at Mizuho Corporate Bank Ltd., a unit of Japan’s second-largest publicly traded lender by assets. “Until the markets become calm, risk aversion will keep causing yen buying.”