By IFCMarkets

Nikkei is rising despite weak Japanese data

Recent Japanese economic data were mixed. Current account surplus widened in February while machinery orders decline accelerated. The Tankan index for big manufacturers’ sentiment fell to a seven-year low of -8 in the first quarter of 2020 from 0 in the prior period, though it still came above market expectations of -10. At the same time large firms indicated plans to rase capital expenditures by 1.8%, down from 6.8% in the previous quarter but above a 1.1% expected decline. And while machinery orders decline accelerated in March to 2.4% over year from 0.3% in February, the decline was smaller than feared. Meanwhile machine tool orders decline accelerated sharply next month to 40.8% over year from 29.6% in February. However, Japan’s government unveiled a monetary and fiscal stimulus package on April 7 to combat coronavirus impact. The total package is worth 108 trillion yen ($990 billion), equal to 20% of Japan’s gross domestic product, with direct fiscal spending amounting to 39.5 trillion yen, or about 7% of the GDP. These measures, together with monetary stimulus program by other developed economies including the US and European Union, buoyed investors’ confidence, leading to recovery in equity market.

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