Bloomberg News

Nikkei 225 Closes at Six-Year High as Yen Dips on Fed Tapering

December 19, 2013

Japanese shares advanced, with the Nikkei 225 Stock Average closing at its highest in six years, after the yen touched a five-year low against the dollar overnight on the Federal Reserve’s decision to reduce stimulus.

Honda Motor Co., a carmaker that gets about 80 percent of sales overseas, climbed 1.1 percent. Tokyo Tatemono Co. advanced 6.7 percent after the developer raised its full-year profit forecast. Nintendo Co. gained 5 percent after a report the games developer may expand into smartphones and tablets. Ohsho Food Service Corp., an operator of Chinese restaurants, fell 3.5 percent after its president was shot dead today outside company headquarters in Kyoto.

The Nikkei 225 increased 1.7 percent to 15,859.22 in Tokyo, its highest close since December 2007. The Topix index climbed 1 percent to 1,263.07, with volume 13 percent above the 30-day average. The yen gained 0.3 percent to trade at 103.99 per dollar today, trimming a retreat of 1.6 percent yesterday when it slid to its weakest since October 2008.

“The Fed’s decision to taper is because the economic recovery is quite strong and that’s giving the market a sense of comfort,” said Masaru Hamasaki, a senior strategist at Tokyo-based Sumitomo Mitsui Asset Management Co., which oversees about 11 trillion yen in assets. “Investors are also hopeful about the pace of tapering and expect that unless data comes in a lot stronger than the Fed forecast, then the speed of reducing bond purchases won’t be too fast.”

First Step

The U.S. central bank decided to trim its monthly bond purchases to $75 billion from $85 billion, taking the first step toward unwinding the unprecedented stimulus that Chairman Ben S. Bernanke put in place to help the economy recover from the worst recession since the 1930s. Fed officials also reduced unemployment projections while the Senate passed a bipartisan budget bill. The Standard & Poor’s 500 Index surged 1.7 percent to a record yesterday. S&P 500 futures slid 0.3 percent today.

Honda gained 1.1 percent to 4,260 yen. Sony Corp. (6758), which generates almost 70 percent of sales outside Japan, added 2.3 percent to 1,820 yen. Panasonic Corp., which gets almost half of revenue abroad, jumped 2.5 percent to 1,213 yen.

The Bank of Japan started a two-day policy meeting today. Central-bank officials see significant scope to increase government-bond purchases if needed to achieve their 2 percent inflation target, according to people familiar with the discussions.

Tokyo Tatemono

Tokyo Tatemono jumped 6.7 percent to 1,130 yen, the most on the Nikkei 225. The developer yesterday raised its full-year net-income forecast by 19 percent to 9.5 billion yen, and boosted its operating-profit outlook 29 percent to 27 billion yen.

Nintendo jumped 5 percent to 13,680 yen, the most in more than a month. The company may develop games for smartphones and tablets, King Broadcasting Co. reported on its website, citing an interview with Reginald Fils-Aime, president of Nintendo’s America unit.

Among stocks that fell, Ohsho Food Service dropped 3.5 percent to 3,000 yen. The restaurant operator’s president, Takayuki Ohigashi, 72, died after being shot today outside company headquarters, the company said. Police are investigating the death and Ohsho can’t comment further, Yutaka Aikawa, a spokesman, said by phone.

The Topix rose 47 percent this year, the most among 24 major developed markets tracked by Bloomberg, as Prime Minister Shinzo Abe and the BOJ took steps to end 15 years of deflation. The gauge traded at 1.28 times book value today, compared with multiples of 2.61 for the S&P 500 and 1.75 for the Stoxx Europe 600 Index yesterday.

To contact the reporter on this story: Anna Kitanaka in Tokyo at akitanaka@bloomberg.net

To contact the editor responsible for this story: Sarah McDonald at smcdonald23@bloomberg.net


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