Nov 17, 2014 10:52 PM
Japan stocks rise on hopes for new stimulus
The Associated Press
BEIJING (AP) Shares in Tokyo jumped Tuesday on expectations, confirmed after markets closed, that the Japanese government would respond to a recession by postponing a sales tax hike. Other global markets mostly made modest gains.
KEEPING SCORE: Germany's DAX rose 0.7 percent to 9,375.81 and France's CAC-40 added 0.4 percent to 4,242.97. Wall Street looked set to give up some of the previous day's gains. Futures for the Dow Jones industrial average and Standard & Poor's 500 were off 0.1 percent. On Monday, the S&P rose 0.1 percent to a new high and the Dow added 0.1 percent.
JAPAN ELECTION: Japan's Prime Minister Shinzo Abe told leaders of his party he would postpone a sales tax hike planned for next year until 2017 and hold elections in December, according to public broadcaster NHK. That confirmed widely held expectations the economy's contraction in the latest quarter, despite the "Abenomics" strategy of loose monetary policy and higher spending, would prompt a delay and new elections. Finance Minister Akira Amari suggested Monday there was a high chance of a stimulus package. Japan's economy, the world's third largest, has now contracted for two straight quarters, meeting the definition of a recession.
THE QUOTE: "The decision not to hike (the Japanese sales tax) means the economy should be stronger over the next couple of years than would otherwise be the case," said Mark Williams of Capital Economics in a report. "That in turn should help the Bank of Japan by increasing price pressures. But we still expect inflation to fall short of the 2 percent target, so more monetary easing is still likely to be required."
GERMAN CONFIDENCE: The ZEW measure of investor sentiment was expected to show a small improvement after 10 months of declines. The survey of investment analysts is more forward-looking than other economic data.
ASIA'S DAY: Tokyo's Nikkei 225 index rose 2.2 percent to close at 17,344.06 before broadcaster NHK reported Abe will postpone a planned sales tax hike and call elections. Seoul's Kospi added 1.2 percent to 1,966.46. The Shanghai Composite Index shed 0.6 percent to 2,456.37 and Hong Kong's Hang Seng declined by 1.1 percent to 23,529.17. Singapore and Indonesia were up, while Sydney declined.
ENERGY: Benchmark U.S. crude was up 52 cents to $76.15 a barrel in electronic trading on the New York Mercantile Exchange. The contract shed 18 cents on Monday to close at $75.64. Brent crude, used to price international oils, rose 44 cents to $79.75 in London.
CURRENCY: The dollar rose to 116.97 yen from Monday's 116.71 yen. The euro rose to $1.2526 from $1.2462.