5:00AM New York, 7:00PM Tokyo – The computer malfunction on the TSE leads to cancellation of all Topix futures trades done in the morning session. Japan’s private sector machinery orders drop a seasonally adjusted 3.2% in December. Isuzu Motors and Japan Airlines profit exceeds expectations.

Trading Halts

The Tokyo Stock Exchange suffered another computer related malfunction this time in the trading of Topix index March futures on the new trading system modules launched on Jan 15th of this year. The problem occurred near the end of the close of the morning session prompting officials to cancel all the trades on the futures in the morning. Other futures contracts were not affected by the computer system problems.

The problem was discovered in the early afternoon when the system failed to calculate and appropriate proper values to the futures contracts and match and process order flow received in the morning. The cause of the malfunction is still not known according to local media reports.

Market Sentiment

In Tokyo trading Nikkei 225 stocks fell 1.44% or 189.91 to 13,017.24, and the broader Topix Index shed 1.4% or 17.94 to 1,287.14.

In the first section of the Tokyo Stock Exchange shares 11.6 billion shares worth 1.4 trillion yen changed hands and in the second section 314 million shares valued at 2.6 billion yen were traded.

The Tokyo Stock Exchange suspended trading of the March 2008 TOPIX futures after computer systems glitch during the morning session.

Of the Nikkei 225 stocks 56 rose, 163 declined, and 6 were unchanged. Isuzu Motors led advancers with a rise of 7.28% after sales in Russia and South Africa helped boost net income by 12%.

Machinery Orders Fall

The Cabinet Office reported today that total machinery orders from 280 manufacturers declined by a seasonally adjusted 6.8% to 2.4 trillion yen in December from the previous month, but rose 2.5% to 7.9 trillion in the quarter to December compared to the previous quarter.

Total machinery orders from January to March are forecasted to rise 10.2% to 8.7 trillion yen. Private sector machinery orders, excluding volatile ones, fell a seasonally adjusted 3.2% in December to 1 trillion yen and increased 0.9% to 3.1 trillion yen in the quarter to December. Overall private sector orders fell 4% in 2007.

Orders are also forecasted to jump 3.5% to 3.2 trillion yen in the three months to March.

Machinery orders for the non-manufacturing sector declined 5.2% in December to 541 billion yen and edged down 2.7% to 1.66 trillion yen in the quarter ended December 31st.

In 2007, non-manufacturing orders fell by 4%. However, orders in the sector are expected to rebound 3.1% to 1.7 trillion yen between January and March.

Government orders rose 8.8% to 729 billion yen, in the three months to December, while during the quarter to March orders are expected to soar 19.6% to 872 billion yen. In December 2007 orders declined 19% to 218 billion yen.

Cumulatively, government orders declined 1.1% in 2007.

Overseas orders plummeted 4.9% to 1 trillion yen in December and rose 1.3% in the quarter to December, but rose 1.3% between October and December 3.3 trillion yen. Orders are forecasted to rise 17.9% to 3.9 trillion yen in the three months to March.

Overall, overseas orders rose 7.2% in 2007.

Tokyo Office Vacancies Fall