Nikkei 225 hits its biggest high in 30 years with Japan reporting better-than-expected GDP

Nikkei 225 hits its biggest high in 30 years with Japan reporting better-than-expected GDP

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THE Nikkei 225 (N225) the index jumped 1.9%, crossing the 30,000-point limit for the first time since August 1990, according to data provider Refinitiv Eikon.
Inventories soared after the country had a stronger than projected GDP, with the economy growing by around 3% in the October-December period, compared to the previous quarter. This translates to an annualized rate of 12.7% and was much higher than analysts had expected.
Overall, Japan’s economy shrank 4.8% last year, down from 5.3% that the International Monetary Fund had foreseen. For comparison, the US economy shrank 3.5% in 2020, while Germany saw its GDP contract by about 5%.

“The solid [performance] confirms that the economy has continued to recover from its pandemic-induced decline, “wrote Stefan Angrick, senior economist at Oxford Economics, in a research note.

“However, high-frequency data shows that momentum started to decline in December, amid an improvement in Covid-19 cases.”

Japan suffers the worst drop in GDP on record, but fared better than others
Japan is battling another wave of coronavirus infections, which has prompted the government to impose a state of emergency in parts of the country.

Angrick said he hoped the measures “will delay, but not hinder, the recovery in 2021, especially as it seems likely an early lifting of restrictions”.

Japan also just granted its first approval for a coronavirus vaccine, giving the green light for the injection of Pfizer-BioNTech. Sunday’s news further raised hopes that the recovery could accelerate.

“At this stage, Japan’s prospects look more favorable and the negative risks are starting to disappear. Not only have local cases of the third wave surpassed their peak, but the approval of the Pfizer vaccine is a significant development that will allow the inoculation boost to start later this week, “said Shahana Mukherjee, economist at Moody’s Analytics.

“We maintain a cautiously optimistic view of Japan’s recovery in 2021, as long as the vaccination campaign goes on without too many interruptions,” she told CNN Business.

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Japan is not the only country with better GDP data. On Monday, Thailand and Singapore released new solid numbers, which helped boost investor confidence, according to Jeffrey Halley, senior Asia-Pacific market analyst at OANDA.

Other markets in the region also recovered on Monday, with that of South Korea Kospi (KOSPI) rate rising 1.5%. Markets in Singapore, Malaysia, Indonesia and Australia also rose, while exchanges in mainland China and Hong Kong were closed due to the Lunar New Year holiday.

“The underlying image is that of a nascent recovery in … Asia [outside of China], “Halley wrote to customers. “The upbeat tone is likely to continue in Europe, unless we have some negative surprises in the headlines.”

The FTSE 100 gained 1.4% at the start of negotiations in London. Germany’s DAX increased by 0.4% and France’s CAC 40 increased by 1.1%.

– CNN’s Junko Ogura in Tokyo contributed to this report.

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