Nikkei Drops 1.5% After BoJ Left Bond Policy Intact

Hiruki Nakamura
11 Jun, 2013
New York City

Bank of Japan left its policy actions unchanged after a 2-day meeting and bond yields rose and the yen declined. The central bank did not extend the recent bank loans maturity to two years from one year as expected by traders. Softbank lifted its offer for Sprint Nextel by 7.5%.

[R]5:30 PM Tokyo – Bank of Japan left its policy actions unchanged after a 2-day meeting and bond yields rose and the yen declined. The central bank did not extend the recent bank loans maturity to two years from one year as expected by traders. Softbank lifted its offer for Sprint Nextel by 7.5%.[/R]

Market indexes in Tokyo closed lower after the Bank of Japan held firm on its stimulus plan and did not accommodate a growing chorus from bankers and economists to extend the maturity of recent bank loans.

Traders and economists had built up expectations of a new policy action from the Bank of Japan to extend the maturity of bank loans to two years from the current one year. However, the central bank offered no change in the current policy directive.

Bank of Japan announced on April 4 to purchase 7 trillion yen or $69 billion of government bonds every month, to double the amount of cash in the financial system in two years and lift inflation above 2%.

Japanese government bond yield has increased to 1% from as low as 0.32% on April 4.

The Nikkei 225 Stock Average declined 196.58 or 1.5% to 13,317.62 and Topix index fell 10.82 or 1% to 1,101.15. Trading volume was 20% below its average for last one-month of trading.

The yen strengthened to 97.79 against one dollar in today’s trading after the Bank of Japan left its stimulus policy intact and did not announce new measure to stem bond market volatility.

Stocks in Review

Toyota Motor Corp rose 20 yen to 5,970 yen and Honda Motor Co. fell 20 yen to 3,635 yen and Nissan Motor Co Ltd added 8 yen to 1,062 yen.

Sony jumped 43 yen to 2,023. Canon Inc declined 100 yen to 3,185 yen and Nikon dropped 89 yen to 2,485 yen.

Fanuc Corp slumped 350 yen to 14,630 yen Softbank Corp slid 20 yen to 5,500 yen.

Seven & I Holdings Co slipped 70 yen to 3,350 yen. Fast Retailing Co. decreased 800 yen to 31,250 yen.

Mitsubishi UFJ Financial Group up 12 yen to 615 yen and Sumitomo Mitsui Financial Group fell 15 yen to 4,225 yen.

Idemitsu Kosan Co., Ltd. fell 0.6% to 7,650 yen and the petroleum products supplier is seeking a stake in a natural gas field in Canada.

Softbank Corp slid 0.4% to 5,500 yen after the mobile carrier raised the offer for Sprint Nextel Corp. by 7.5% to $21.6 billion to counter the bid from Dish Network Corp.