Nikkei in 9th Weekly Advance on Stimulus Plan and Central Bank Pressure

Nigel Thomas
11 Jan, 2013
New York City

Stocks in Tokyo closed higher and closed the ninth weekly advance in a row, the longest weekly increases since 1988. Prime Minister Shinzo Abe proposed $115 billion of stimulus plan and demanded central bank to put maximizing employment on top of its agenda.

[R]7:00 PM Tokyo – Stocks in Tokyo closed higher and closed the ninth weekly advance in a row, the longest weekly increases since 1988. Prime Minister Shinzo Abe proposed $115 billion of stimulus plan and demanded central bank to put maximizing employment on top of its agenda.[/R]

The yen continued to weaken after Prime Minister Shinzo Abe announced new measures to prop up the struggling economy.

Stocks in Tokyo trading hit a new 22-month high in Friday’s trading and gained for the ninth week in a row, the longest advance since 1988.

The Nikkei 225 Stock Average advanced 148.93 or 1.4% to 10,801.57 and the broader Topix Index jumped 9.67 or 1.1% to 898.69. For the week, the Nikkei increased 1.1%.

The yen dropped as low of 89.32 against one dollar, a 2-1/2 low and managed close at 88.93.

10 Trillion Yen Stimulus Plan

Prime Minister Shinzo Abe revealed 10.3 trillion yen or $115 billion of stimulus package that included public works, corporate incentives and investment incentives for small and financial firms.

The government also plans to offer 5 trillion yen of more government bonds than originally planned for the next financial year.

Government officials contend that when taken together with the local government and private sector spending the total impact on the economy will increase to 20 trillion yen.

Prime Minster Abe also mentioned that his government will work closely with the Bank of Japan and made his strongest case to expand the central bank charter to include the “maximum possible employment at the top of list of goals.”

The Bank of Japan is expected to release a statement after the policy meeting and the expectations are high that the central bank will increase its inflation target to 2% from the current 1%.

Stocks in Review

Toyota Motor Corp. jumped 55 yen to 4,260 yen and Honda Motor Co. climbed 50 yen to 3,380 yen and Nissan Motor Co Ltd increased 19 yen to 873 yen. Mazda Motor Corp advanced 9 yen or 4.6% 204 yen.

Nippon Steel up 1 yen to 223 yen and JFE Holdings Inc climbed 53 yen to 1,678 yen.

Shimano Inc increased 40 yen to 5,790 yen.

Sony Corp gained 15 yen to 983, Canon Inc jumped 75 yen to 3,370 yen and Nikon advanced 88 yen to 2,721 yen.

Nintendo Co. Ltd surged 480 yen or 5.6% to 9,060 yen and Pioneer Corp. added 6 yen to 228 yen.

Fanuc Corp. declined 230 yen to 15,630 yen and Komatsu Ltd increased 36 yen to 2,330 yen. Hitachi Construction Machinery Co climbed 40 yen to 1,902 yen.

Sharp Corp soared 12% on a report in the Asahi newspaper said Mizuho Corporate Bank and Bank of Tokyo-Mitsubishi UFJ are likely to offer more loans to the struggling TV maker.

Softbank Corp dropped 20 yen to 3,020 yen.

FamilyMart Co Ltd, the convenience chain operator gained 20 yen to 3,610 yen and Lawson jumped 70 yen to 6,180 yen. Ito En Ltd increased 11 yen to 1,679 yen.

Seven & I Holdings Co slipped 6 yen to 2,614 yen. Fast Retailing Co. soared 1,080 yen or 4.8% to 23,640 yen and J. Front Retailing Co. Ltd gained 5 yen to 499 yen.

Mitsubishi UFJ Financial Group added 5 yen to 479 yen and Sumitomo Mitsui Financial Group jumped 45 yen to 3,330 yen.

Nomura Holdings, Inc lowered 3 yen to 490 yen on the worries that the stock has run ahead of its fundamentals.

Mitsui O.S.K. Lines, Ltd increased 7 yen to 280 yen and Nippon Yusen K.K. up 4 yen to 216 yen.