Stocks climbed in Tokyo over night, with the Nikkei 225 closing up 2.57%, after Japanese Prime Minister Shinzo Abe said he might recommend a cut to corporate taxes to offset increases in the sales tax currently scheduled to begin to take effect in April 2014. An Abe advisor also suggested delaying the start of the increase in the national sales tax to later in 2014.
In the very short term Japan’s disappointing second quarter GDP figures have taken down share prices in Tokyo. In the slightly longer term, the negative news is likely to weaken the yen on speculation that the Bank of Japan will move to speed up policies designed to stimulate Japan’s economy by weakening the yen. And a weaker yen is good for profits at Japanese exporters and for Japanese stock prices in general.
Industrial production fell in June by 3.3% from May, the Japanese Trade Ministry announced today. Economists surveyed by Bloomberg had expected a 1.5% drop. On the news the yen fell to 98.13 against the dollar and Tokyo stocks rallied
Friday news that Japan, the home of deflation, deflation, and more deflation, had turned in its highest rate of inflation in five years in June sent stocks in Tokyo down 2.97%. Here’s why good news was bad news and why, I think, the market over-reacted.
On the news the Nikkei 225 dropped 2.97% in Tokyo for Friday’s session.
