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Market Update

Bank of Japan Lifts Economic Assessment, Nikkei Jumps 1.6%

Author: Hiruki Nakamura
Last Update: 8:48 AM ET May 22 2013

5:30 PM Tokyo – Market indexes advanced to new highs since December 2007 after the Bank of Japan lifted its economic assessment for the fifth month in a row and did not offer any comments on the rising bond market yields. The yen dropped to a new 4-year low.

Stocks in Tokyo advanced after Bank of Japan revised its economic assessment higher and the yen drifted lower.

Bank of Japan lifted its economic outlook and repeated its plan to expand monetary base by 60 to 70 trillion yen a year. The central bank lifted its economic assessment for the fifth month in a row and reiterated it has “started to gather steam.”

Despite the central bank’s plan to pump 7.5 trillion yen a month, government bond yields have been on the rise. The 10-year government bond yield jumped as high as 0.92%.

Last week Bank of Japan injected 2.8 trillion yen in the market to dampen the recent surge in bond market yield.

Market indexes are at 5-year highs and the yen is trading at 4-year low after the aggressive government and central bank policies.

The yen edged lower to 102.76 against one dollar and the yen has dropped nearly 22% from 86.67 at the beginning of the year.

The Nikkei 225 Stock Average climbed 246.24 or 1.6% to 15,627.26 and the broader Topix Index gained 5.64 to 1,276.03.

Stocks in Review

Toyota Motor Corp slid 10 yen to 6,630 yen and Honda Motor Co. fell 10 yen to 4,250 yen and Nissan Motor Co Ltd slipped 17 yen to 1,215 yen.

Sony surged 127 yen or 5.9% to 2,290. Canon Inc jumped 85 yen to 3,885 yen and Nikon lowered 12 yen to 2,866 yen.

Sony Corporation surged after accelerating initiatives to revitalize and grow its electronics business based on the corporate strategy. The boards of directors discuss whether to adopt billionaire Daniel Loeb’s proposal for an initial public offering of its entertainment business.

On a proposal, Sony responds “The entertainment businesses are important contributors and are not for sale.”

Fanuc Corp. climbed 440 yen to 16,640 yen Softbank Corp declined 120 yen to 5,730 yen.

Seven & I Holdings Co closed unchanged at 3,845 yen. Fast Retailing Co. soared 2,850 yen or 7.4% to 41,400 yen.

Mitsubishi UFJ Financial Group closed up 9 yen to 699 yen and Sumitomo Mitsui Financial Group increased 25 yen to 4,665 yen.

Tokyo Electric Power Company, Inc plunged 78 yen or 9.6% to 737 yen after the nuclear watchdog approved the expert panel’s conclusion that the seismic fault underneath one of the reactors operated by Japan Atomic Power Co is active, making the restart virtually impossible.

The chairman of the regulator said in Tokyo “Tsuruga plant is built on an active earthquake fault and violates the safety rules for nuclear plants.

Nine regional utilities have stake in Japan Atomic Power and the decision is significant for the industry that faces decommissioning of more reactors.

Sources: Data collected by 123jump.com and Ticker.com from company press releases, filings and corporate websites. Market data: BATS Exchange. Inc