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Market Update

Wholesale Prices in Japan Increase at Fastest Pace in 5 Years

Author: Hiruki Nakamura
Last Update: 10:18 AM ET December 11 2013

4:30 PM Tokyo – Traders in Japan unwound yen short positions and the currency gained for the second day in a row. Wholesale prices rose 2.7% in November, the eighth monthly increase in a row on weaker yen. Core machine orders rose 0.6% in October.

Stocks in Tokyo closed higher and the yen gained for the second day in a row as traders unwound short positions in the currency. Machinery orders increased less than expected and wholesale inflation shot up at the fastest pace in five years.

The Bank of Japan said wholesale prices rose 2.7% in November from a year earlier, the eighth monthly increase in a row and the largest jump in five years.

The prices rose on weaker yen and higher energy prices and utility bills rose 10.8% and iron and steel prices gained 4.4%. Prices of lumber and wood products soared 13.9% on weaker yen. Petroleum products and coal prices increased 12.6%.

In a separate report, the Cabinet Office said core machine orders rose 0.6% in October from the previous month.

The indicator of future spending is closely watched for large company activities and the government revised its language and said “orders are in a moderate rising trend.”

The Nikkei 225 Stock Average slipped 96.25 or 0.6% to 15,515.06 and the Topix fell 5.88 to 1,250.45.

The yen closed at 102.75 against one dollar.

Stocks in Review

Paper companies declined and Nippon Paper fell 4%, Hokuetsu Kishu Paper declined 2.5% and Mitsubishi Paper Mills Ltd decreased 3%.

Toyota Motor Corp dropped 50 yen to 6,220 yen.

Honda Motor Co. slumped 35 yen to 4,215 yen and the vehicle maker said its Nigeria-based unit launched CG110 motorcycle model and updated models of 125cc-class motorcycles from today.

Nissan Motor Co Ltd fell 13 yen to 897 yen automobile company announced today that the all-new X-Trail SUV will commence sales at dealers throughout Japan from December 16 with target sale of 2,500 units per month.

Sony slid 3 yen to 1,823 yen.

Softbank Corp jumped 160 yen to 9,060 yen after the US-based investment fund Capital Research and Management reduced its stake in Japan-based telecom to 1.11 million shares or 9.34% of voting rights.

Fast Retailing Co. declined 450 yen to 37,700 yen.

Hitachi, Limited slipped 1.3% to 749 yen and the diversified company is considering to relocate its business operations for its overseas rail business in the U.K. from Tokyo.

In just last two years, Hitachi secured orders from U.K. to deliver 866 high-speed railway cars and a maintenance contract for 28 years. The value of the project is estimated to approx 880 billion yen.

Hitachi plans to increase its overseas revenue by more than 50% in the fiscal 2016.

Kansai Electric Power Co Inc declined 3.1% to 1,182 yen after the Nikkei news reported that safely checks for nuclear reactor restart will likely be delayed.

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