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Market Update

First Current Account Surplus in Japan in Five Months

Author: Hiruki Nakamura
Last Update: 11:41 AM ET April 08 2014

4:30 PM Tokyo Current account swung to a surplus in Japan for the first time in five months in February. Trade deficit in the month narrowed but is expected to increase if imports sustain the momentum after the latest tax increase.

Stocks in Tokyo declined and market averages fell for the third day in a row after the Bank of Japan left its bond buying program intact and interest rates near record low.

The central bank was expected to leave the monetary stimulus unchanged and in a statement the bank noted moderate economic expansion and added that the recent increase in tax is likely to affect the economy only temporarily.

The Bank of Japan policy committee met for the first time after the tax increase and investors are hoping that additional unconventional steps may be needed to support the expansion.

The current account in February rebounded to a surplus of 612.7 billion yen or $5.9 billion and narrowed 5.7% from a year ago month, Ministry of Finance reported today.

The surplus not adjusted for seasonal factors was the first in five months following the 1.589 trillion yen deficit in January.

The trade deficit declined 1.4% from a year ago to 533.4 billion following the 2.345 trillion yen deficit in last month.

Exports surged 15.7% to 5.941 trillion yen while imports in the year soared 14.1% to 6.474 trillion yen.

Imports and trade deficits are expected to decline in the coming months after the increase in sales tax.

The Nikkei 225 Stock Average dropped 201.97 or 1.4% to 14,606.88 and the Topix index declined 22.28 or 1.9% to 1,174.56.

The yen increased to 102.83 against the U.S. dollar, its best level in five days of trading.

Stocks in Review

Toyota Motor Corp declined 135 yen to 5,623 yen. Honda Motor Co dropped 116 yen to 3,455 yen. Nissan Motor Co Ltd fell 0.7% to 932 yen.

Sony slumped 27 yen to 1,961 yen.

Softbank Corp plummeted 339 yen or 4.5% to 7,217 yen. Fast Retailing Co climbed 245 yen to 38,220 yen.

Asahi Glass Co. Ltd slid 0.2% to 589 yen after the company estimated its operating profit for the quarter ending in March may decline 21% to 14 billion yen.

AEON Mall Co., Ltd dropped 3.4% to 2,615 yen after the Japan-based retail stores operator reported revenue in the year ending in February climbed 9.6% to 176.9 billion yen from 161.4 billion yen a year ago.

Net income in the year jumped 7.2% to 23.4 billion yen compared to 21.9 billion yen and diluted earnings per share slid to 106.91 yen from 109.68 yen a year earlier.

Takeda Pharmaceutical Co. Ltd declined 5.2% to 4,572 yen after the U.S. jury ordered to pay $6 billion as the company lost the federal court trial for the claims as the company hid the cancer risks of its Actos diabetes medicine.

The company said it will challenge the decision. The company and its partner Eli Lilly & Co. were ordered by the court to pay a combined $9 billion.

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