After a flurry of disappointing GDP reports from the United States and Europe, not to mention last week’s uniformly poor Chinese economic data, Japan was the latest country to report that nominal economic growth in the second quarter rose a disppointing 0.2% annualized, missing expectations of a 0.7% increase, and down from the revised 2.0% GDP growth in Q1, while on a sequential basis GDP was flat with the first quarter. “From the equity market’s point of view, as long as you have broad stability in the economy, that will keep people reasonably comfortable with Japanese equities, so this [Monday’s GDP data] is as good as you can expect”, he added.
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Monday’s data were far weaker than expected by the likes of economists at Barclays Research, which had forecast an annualised rate of GDP growth of 1.3%, arguing that the economy was likely to exceed its “potential” rate of growth (0.00% -0.50% annualised) on average over the first two quarters of 2016.
In terms of consumer spending, analysts said solid corporate earnings have not translated into increased salaries or pay increases, with employees’ salaries being raised an inappreciable 0.3 percent in the recording quarter from the previous one, meaning that consumers are reluctant to spend.
On a yearly basis, GDP expanded 0.2% – also beneath forecasts for 0.7% and sharply lower than 1.9% in the three months prior.
Nickel eked out a 0.2 per cent climb in London, following Friday’s slide, while copper swung between gains and losses and zinc slipped 0.2 per cent.
The pan-European STOXX 600 index dipped a touch on Friday but that was from a seven-week high.
“After a period of strong gains, shares are due to take a breather”, said Shane Oliver, head of investment strategy at AMP Capital.
“The number confirmed that there are still risks in the global economy”, said Kuwahara.
High on the US calendar this week are inflation figures for July and minutes of the last Federal Reserve meeting which might offer more clues on the chance of a rate hike by year end. There are also five separate Fed speakers on the docket this week.
Japan’s GDP grew 0.2 percent quarter-on-quarter in second quarter, as compared with consensus projection of 0.7 percent growth.
The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, was last quoted at 95.68. But some experts are now questioning whether the central bank is reaching the limits of what monetary policy can do.
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In other trading, the euro fetched $1.1158, edging down from $1.1166. New Zealand’s S&P/NZX 50 Index gained 0.1%.
