“Whilst the latest Japanese economic growth data have failed to meet expectations not everybody is viewing this necessarily as massively negative”. Slowdown in China as well as the United States affected Japan’s external demand. Thai Q2 GDP was up 3.5 percent on an annual basis, beating the median forecast of 3.2 percent, according to Reuters. Basic material and banking stocks also saw weakness.
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Wall Street looked set to add fractionally to last week’s string of all-time highs ESc1 [.N] while London .FTSE, Frankfurt .GDAXI and Paris .FCHI were up 0.2-0.4 percent as healthcare and energy stocks kept them buoyant in Europe. Oil rallied strongly in the second half of the week amid fears of tightening of supplies. Among the S&P 500’s biggest drags was Dow Chemical, which fell 2.4 percent to $52.33, while DuPont declined 1.9 percent to $67.66, a day after European Union regulators opened a full investigation of their $130 billion merger agreement.
Also dampening sentiment in Japan was a relatively stronger yen, which traded at 101.27 against the dollar as of 8:35 a.m. HK/SIN. The euro rose to $1.1168 from $1.1165. Business confidence has slumped to levels last seen when he swept to power in late 2012 on a ticket to fire up an economy beset by years of falling prices and weak growth. German Bunds were at a deeply sub zero -0.16 percent ahead of US trading and Spanish yields ES10YT=RR were comfortably under 1 percent at 0.92 percent having falling over 60 bps in the last couple of months. European shares were mostly higher Monday, Aug. 15, tracking gains in Asia, as investors awaited the release of US housing, inflation and manufacturing data this week. Marcel Thieliant of Capital Economics said: “Inflation expectations remain poorly anchored, and the prospect of a prolonged period of below-target price gains raises the risk that expectations will move further away from the 2 percent inflation target”. The Hang Seng Index was last up 0.1% and Korea’s Kospi closed 0.1% lower.
Japan’s Cabinet Office has released a preliminary estimate of Q2 GDP growth for the country, revealing that the economy grew by an annualised 0.2% in the second quarter.
It was the second straight quarter of expansion but much slower than a revised 2.0 percent increase in January-March.
A separate government report showed that industrial production in Japan rebounded by more than initially estimated in June. After a weak start, Japan’s Nikkei 225 average, trimmed its losses and popped into the positive territory by early afternoon trading.
Overseas demand shaved 0.3 percentage point off GDP, subtracting from growth for the first time in four quarters, underscoring the pain sluggish global growth is inflicting on the export-reliant economy.
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In Japan, construction, retail, paper, chemical, resource and most export, finance and utility stocks came under selling pressure.
