Japan's economy entered its first recession in seven years after the government reported that GDP contracted for the second consecutive quarter. The world's third-largest economy behind the US and the eurozone shrank at an annualized rate of 0.4% in 3Q, according to preliminary data, missing the consensus forecast of a scant 0.1% rise. GDP in 2Q was revised lower. Japan's economy minister conceded the economy has slipped into a recession, and analysts are worried conditions may worsen due to the strengthening yen and struggles in the US and in Europe. Stocks reacted poorly at the opening but shares came off lows in midmorning action on a modest drop in the yen, which aided exporters. The benchmark Nikkei 225 Index closed up 0.7%.
Elsewhere, China National Petroleum said problems with the economy are causing oil demand to quickly drop and inventories to rise. China's central bank has been cutting rates to prop up domestic demand and said this morning that it will follow a moderately loose monetary policy and will actively work to expand domestic demand. Stocks in China ended the day higher. A focus on the country's economic stimulus plan helped shares.
-- Schwab Center for Financial Research - Market Analysis Group
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