Another of Australia’s big trading partners is in dire straits, with one of Japan’s top economic officials declaring the economy is contracting at an “unimaginable rate” and faces its biggest downturn in 50 years.
Bank of Japan head of research and statistics, Kazuo Momma, told Bloomberg that the nation’s economy – the second largest in the world – is in freefall.
“Japan’s recent economic decline is faster than that of the US, which has been experiencing the worst financial crisis in a century,” he said.
The news comes as Japanese vehicle manufacturer Nissan says it will cut 20,000 jobs including 12,000 in Japan, and will post its first operating loss of $A2.9 billion for the year ending 31 March. The group forecast a $A4.4 billion profit just three months ago.
The group also says the 20,000 cuts will occur over the next year, reducing its overall workforce by 8.5% by the end of March 2010.
The Australian sharemarket opened lower today after flat results from Wall Street overnight.
The benchmark S&P/ASX200 index was down 24.2 points or 0.69% to 3484.4 at 12.00 AESDT. The dollar also gained some ground, up to US67 cents.
Westpac shares were down 1.5% to $16.27, while ANZ also lost 1.6% to $12.26. NAB lost 0.5% to $18.80 while Commonwealth Bank gained a modest 0.2% to $30.01.
Telecommunications group Optus has recorded a flat third quarter net profit of $143 million, while parent Singapore Telecommunications posts a net profit of $A793 million – down 16% from the previous year.
For the three months ending 31 December, Optus increased operating revenue by 10% to $2.2 billion, led by mobile and wireless broadband products.
“Despite the difficult environment, Optus delivered strong results in all areas,” Optus chief executive Paul O’Sullivan said in a statement.
Meanwhile, casino group Crown will include $450 million in non-cash write downs associated with US minority investments in its half year report.
“The impact on Crown’s profit and loss statement of these write downs is expected to be approximately $450 million,” Crown said in a statement on Monday.
“The decline in valuations has been precipitated by the current economic situation in the US. The decline also reflects the uncertainty regarding the future capital structure of Stations Casinos following its announcement last week concerning a proposal to its bond holders to restructure its debt.”
Overseas, Wall Street suffered only a minor fall as traders became anxious about an announcement from Treasury Secretary Timothy Geithner regarding the $US700 bailout bill. Geithner has suspended the announcement until early tomorrow morning Australian time.
The Dow Jones Industrial Average dropped just 9.72 points or 0.12% to 8270.87. Oil prices also fell to $US39 a barrel.
Patrick Stafford is a freelance journalist and a former deputy editor of SmartCompany.
