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Tokyo stocks rebound after inflation

January 31, 2014

Tokyo stocks rose Friday after Japan logged its first rise in consumer prices for five years, while better-than-expected US growth data helped soothe fears about emerging economies that had fuelled a global sell-off this week. With most Asian markets closed for the Chinese New Year holiday trade was flat but investors took their lead from a Wall Street rally that also lifted the dollar, giving a boost to Japan's exporters. Tokyo's Nikkei-225 index rose 0.15 percent by the break, clawing back some of the 2.45 percent losses suffered on Thursday. Sydney was up 0.16 percent and Wellington added 0.69 percent. Hong Kong, Shanghai , Seoul , Taipei , Jakarta , Kuala Lumpur , Manila and Singapore were closed for holidays. Wall Street and European stocks mostly rebounded Thursday after the US Commerce Department released data showing the world's number one economy expanded 3.2 percent in October-December. The figure was well above the 3.0 percent projected by analysts, while investors were also cheered by a 3.3 percent rise in consumer spending, which is a crucial driver of growth in the United States . The upbeat numbers provided much-needed relief after the turmoil unleashed by the US Federal Reserve's decision to further cut its stimulus programme. The central bank's announcement raised fears of a flight of capital from developing nations such as Indonesia , India , South Africa and Russia , sending their currencies plunging against the dollar. However, Thursday US growth figures gave them a fillip, with Russia's ruble, the South African rand, Turkey's lira, Brazil's real and the Indian rupee all either flat or stronger, even as the dollar itself surged against major currencies. On Wall Street , the Dow rose 0.70 percent and the broader S&P 500 added 1.13 percent. The Nasdaq jumped 1.77 percent, helped by strong gains in Facebook , Twitter, Google and other online ad-dependent tech stocks. "There are risks of further fallout in emerging markets as the US Fed's tapering policy proceeds but this can be seen as natural after several years of easy money," Tachibana Securities market analyst Kenichi Hirano told Dow Jones Newswires. The dollar was at 102.80 yen early Friday compared with 102.71 yen late Thursday in New York and much improved from the 102.40 yen earlier Thursday in Asia . The euro fetched $1.3557 and 139.18 yen against $1.3554 and 139.21 yen . Japan's fight against deflation had a boost after official data showed consumer prices rose 0.4 percent last year, the first annual rise since 2008. The Bank of Japan has an ambitious target of 2.0 percent inflation by mid-2015. In another positive sign, separate data showed that spending by Japan's households was up last month as the nation's factories expanded their output, while the unemployment rate hit a six-year low. On oil markets, US benchmark West Texas Intermediate for March delivery eased seven cents to $98.16 a barrel, while European benchmark Brent for March fell 10 cents to $107.85 . Gold fetched $1,242.80 at 0220 GMT , compared with $1,257.30 late Thursday. copyright

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Source: Daily Tribune (Bahrain)

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