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Japanese markets – rumors, tardiness and caution

usd-jpy-nky-spxBegan timidly recovery shares in Japan under the influence of rumor somewhere breathed investor optimism that sales tax planned for quite some time by Shinzo Abe will be postponed. The rumor is that it will be announced at the meeting of the G7. So shares in Asia finally ripped from one-month lows. The Nikkei 225 NKY: IND is currently trading at 16,466.40 with decline in return on an annual basis by -17.21%, while the same indicator for the S&P500 is  -3,88. On global level – failures in the stock market in Japan and protective attractiveness of the JPY remain in focus of the investors.

Prime Minister Shinzo Abe is shifting his economic policies to the left in a bid to broaden his appeal ahead of a key election this summer. In stark contrast to his opening Abenomics salvo three years ago, which weakened the yen and boosted corporate profits and stock prices, the premier is now poised to unveil policies more attractive to poorer voters than big business. He’ll unveil this package, called “a plan to promote dynamic engagement of all citizens,” later this month.

Likely to be included is a proposal to mandate wage increases for part-time and temporary workers, scholarships for less wealthy students and improvements to child care and conditions for nursery school teachers.

All this had little additional pressure on the JPY, for which expectations remain still positive despite successive attempts by the BOJ to cause a fall. Investors are passive and very cautious while awaiting key data on May 18 (Japan – GDP Q1 2016).

 


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