Japanese Shares Tumble, Sony Stung by Melting Computers and Toyota Faces More Recalls
In Japan, investors were spooked by both the recent slowdown in Chinese manufacturing growth and by Moody's Investors Service's threat to downgrade Spain's credit rating by as much as two grades from its current Aaa classification. All eyes were also focused on China's Purchasing Manager's Index, which dropped in May, and is now hovering at 52.1, only just above the 50 mark that indicates expansion, according to China Knowledge.
In Japan, exporters helped drag the Nikkei to a seven month low. Sony tumbled 3.7%, not helped at all by the forced recall of at least 500,000 Vaio computers that are prone to overheating. According to the BBC, Sony says the problem can be fixed with a "software patch," and while no burns have been reported so far, computers have gotten so hot they have melted. Pioneer slid 3.7%, Canon slumped 3.2% and Nikon fell 2.1%.
It was a rough day for Japanese car parts manufacturers. Car audio system maker Clarion dived 5.8%, electronic parts company Alps Electric plummeted 3.9% and Jtekt, which is affiliated with Toyota, dropped 2%. And the car companies themselves did no better, also hurt by a strengthening yen, which decreases the amount of cash exporters get once they convert overseas earnings back to the home currency. Mazda nosedived 5.2%, Isuzu plunged 4.4%, Honda fell 3.3% and Nissan slumped 3.2% Toyota slid 2.3%. Japan's favorite car maker just can't seem to catch a break, after repairing more than 10 million cars over the past year, Toyota's now planning a worldwide recall of Lexus models with engine faults. This could total 270,000 units, according to the Telegraph.
In China, mining companies suffered from investor fear of a slowdown. Yanzhou Coal Mining plunged 3.8% and Jiangxi Copper tumbled 2.6%. Other commodity producers also lost with Baoshan Iron & Steel falling 1.5%, Zijin Mining sliding 2.1% and Chalco, or Aluminum Corp. of China, sliding 2.8%.
Healthcare stocks were among the hardest hit sectors in China today. Jiangsu Hengrui Medicine tumbled 5.4% and Jiangsu Yuyue Medical Equipment slumped 5%. Shandong Dong-E E-Jiao-A, a maker of blood remedies concocted from donkey skin, skidded 4.2% and Jilin Aodong Medicine Industry Groups, which makes products for brain enhancement, fell 2.3%. Perhaps one of these companies has a remedy for an ailing global economy.