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Market Update

Nikkei Rebounds 4.9%, Japan Revises March Quarter Growth to 4.1%

Author: Hiruki Nakamura
Last Update: 9:14 AM ET June 10 2013

5:30 PM Tokyo – Stocks in Tokyo rebounded as Bank of Japan starts a 2-day policy meeting and the Cabinet Office revised first quarter economic growth estimate to 4.1%. The yen weakened and the Nikkei soared 4.9%.

Market indexes rebounded after a three-week rout that erased nearly $600 billion in market valuation and index decline indicated bear market sentiment.

Investors took a positive view on the latest decision by the pension fund to increase a slight increase in equities holdings and also held out hopes of new measures to quell bond market volatility from the Bank of Japan.

The Nikkei 225 Stock Average surged 636.67 or 4.9% to 13,514.20 and Topix index climbed 55.02 or 5.2% to 1,111.97.

The yen strengthened to 98.76 against one dollar in today’s trading after the pension fund said it will increase its stock allocation slightly but pare its government bond holding.

The Cabinet Office revised its estimate of first quarter economic growth to 4.1% from the previous estimate of 3.5%.

Bank of Japan started a 2-day policy meeting today and members are expected to discuss recent market volatility and may extend the bank loans to two years. Bond market has been volatile and the yields on the government bonds have been on the rise.

Government Pension Investment Fund, the largest retirement fund in world, said it will increase its Japanese equities allocation by 1% to 12$ but cut its domestic bond holding to 60% from 67%.

The fund also plans to increase its allocation of foreign stocks to 12% from 9% and foreign bond holdings to 11% from 9%.

Stocks in Review

Toyota Motor Corp surged 470 yen or 8.9% to 5,950 yen and Honda Motor Co. climbed 160 yen or 4.9% to 3,655 yen and Nissan Motor Co Ltd soared 61 yen or 6.1% to 1,054 yen.

Sony jumped 126 yen or 6.8% to 1,980. Canon Inc advanced 100 yen or 3.4% to 3,285 yen and Nikon increased 111 yen or 4.5% to 2,574 yen.

Fanuc Corp gained 350 yen to 14,980 yen Softbank Corp surged 480 yen or 9.5% to 5,520 yen.

Seven & I Holdings Co added 115 yen to 3,420 yen. Fast Retailing Co. climbed 950 yen to 31,050 yen.

Mitsubishi UFJ Financial Group jumped 33 yen or 5.8% to 603 yen and Sumitomo Mitsui Financial Group advanced 190 yen to 4,240 yen.

Kobe Steel, Ltd. surged 14 yen or 11.4% to 137 yen after the Japan based steel maker plan to invest 2.55 billion yen with India based Steel Authority of India Ltd to set up a 0.5 million tons a year iron nugget plant at West Bengal of India.

Marubeni Corporation climbed 25 yen or 3.8% to 688 yen after the sugar and processed food maker said under the revised purchase plan, Marubeni will still acquire 100% of the equity interests of Gavilon and the sellers will receive approximately $2.60 billion in cash and will retain Gavilon’s energy business.

Separately, Marubeni plans to supply electricity and steam to petroleum-related complexes in Saudi Arabia. Total costs estimated to exceed $600 million.

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