Japanese Bond Yields Slide, Nikkei Surges 1.7% Ahead of Elections

Nigel Thomas
13 Dec, 2012
New York City

Stocks in Tokyo surged and the benchmark Nikkei soared 1.7% to a new 8-month high ahead of general election on Sunday. Defense stocks gained for the second day in row as tensions escalated in disputed territories with China.

[R]7:00 PM Tokyo – Stocks in Tokyo surged and the benchmark Nikkei soared 1.7% to a new 8-month high ahead of general election on Sunday. Defense stocks gained for the second day in row as tensions escalated in disputed territories with China.[/R]

Stocks in Tokyo surged to a new 8-month high as investors shifted focus to the general election on Sunday.

The opposition Liberal Democratic Party is leading in opinion polls ahead of the election this weekend and investors are hoping that a change in central government will lead to more economic stimulus from the Bank of Japan.

Ministry of Finance completed the sale of 2.5 trillion yen for 5-year notes that yielded 0.2% and matched the previous auction. Bid-to-cover ratio declined to 3.54 from 4.96 in the previous auction last month.

The yield on 5-year bond increased 0.5 basis points to 0.165%.

Investors are also looking ahead the release of large manufacturer survey from Bank of Japan and the expectations are low. The sentiment is expected to drop to the weakest since the first quarter of 2010.

The Nikkei 225 Stock Average advanced 161.27 or 1.7% to 9,742.73 and the broader Topix Index jumped 7.92 to 799.21.

The yen edged lower and closed at 83.43 against one dollar.

Stocks in Review

Defense contractors jumped for the second day after China sent rockets in the air space over disputed islands and yesterday North Korea successfully launched a rocket.

IHI Corp, the maker of rocket propulsion system gained 3 yen to 191 yen. Fuji Heavy Industries Ltd, the maker of aircraft parts climbed 27 yen to 945 yen.

Osaka Securities Finance extended gains for the second day and soared 7.4% to 217 yen after the Financial Services Agency approved the merger with the rival. The merged entity will be named Japan Exchange Group and will list on the Tokyo Stock Exchange.

Kansai Electric Power increased 6 yen to 755 yen and Tokyo Electric Power Co closed unchanged at 141 yen. Shikoku Electric dropped 23 yen to 1,107 yen and Chubu Electric Power Co closed unchanged at 1,055 yen.

Toyota Motor Corp. advanced 40 yen to 3,600 yen and Honda Motor Co. climbed 75 yen to 2,824 yen and Nissan Motor Co Ltd gained 17 yen to 788 yen. Mazda Motor Corp increased 6 yen or 4.4% to 142 yen. Isuzu Motors Ltd jumped 12 yen to 494 yen.

Nippon Steel slid 2 yen to 184 yen and JFE Holdings Inc climbed 18 yen to 1,362 yen. Tokyo Steel Manufacturing surged 17 yen or 5.6% to 320 yen.

All Nippon Airways down 0.5% to 175 yen and. JAL plummeted 50 yen to 3,755 yen.

Fujikura Ltd gained 10 yen to 243 yen and TDK soared 175 yen or 5.6% to 3,325 yen. Murata Manufacturing Co increased 135 yen to 4,880 yen and Meiko Electronics Co Ltd added 0.8% or 720 yen.

Shimano Inc declined 70 yen to 5,700 yen.

Oki Electric Industry added 2 yen to 89 yen, Ricoh Co Ltd climbed 41 yen or 5.3% to 809 yen, Sony Corp surged 53 yen or 6.4% to 886 and Seiko Epson Corp jumped 34 yen or 6.7% to 543 yen.

Canon Inc advanced 65 yen to 3,140 yen and Nikon soared 145 yen or 6.4% to 2,401 yen.

Olympus Corp. gained 18 yen to 1,406 yen and Nintendo Co. Ltd jumped 130 yen to 9,070 yen, Fujitsu increased 10 yen to 307 yen and Pioneer Corp. added 6 yen to 218 yen. Sharp Corp soared 15 yen or 6.4% to 250 yen. Panasonic Corp surged 35 yen or 7.9% to 481 yen.

Fanuc Corp. jumped 660 yen or 4.6% to 15,000 yen and Komatsu Ltd increased 29 yen to 1,916 yen. Hitachi Construction Machinery Co climbed 36 yen to 1,524 yen.

Sumitomo Heavy advanced 22 yen or 6.2% to 380 yen.

FamilyMart Co Ltd, the convenience chain operator declined 100 yen to 3,605 yen and Lawson dropped 120 yen to 5,650 yen. Ito En Ltd decreased 17 yen to 1,545 yen.

Seven & I Holdings Co slumped 21 yen to 2,418 yen.

Fast Retailing Co. climbed 410 yen to 20,200 yen and J. Front Retailing Co. Ltd increased 6 yen to 417 yen.

Mitsubishi UFJ Financial Group gained 4 yen to 382 yen and Sumitomo Mitsui Financial Group jumped 74 yen to 2,772 yen. Nomura Holdings, Inc climbed 14 yen to 364 yen.

Mitsui O.S.K. Lines, Ltd surged 12 yen or 5.9% to 217 yen and Nippon Yusen K.K. increased 7 yen or 4.1% to 177 yen.