Japan’s economy has had a wild first 48 hours of the trading week. An abysmal Q3 GDP report, PM Shinzo Abe has pushed back next year’s planned sales tax hike and called for snap elections to take place in less a month to consolidate his political power.
Less than 24 hours after heads of state gathering in Brisbane, Australia, agreed to take measures that would boost their economies, the Cabinet Office delivered news in Tokyo that Japan’s gross domestic product unexpectedly shrank an annualized 1.6%.
The yen fell to a seven-year low versus the dollar on speculation Japan’s Prime Minister Shinzo Abe is considering postponing a planned sales-tax increase and preparing to call a snap election next month.
Despite Friday’s non farm payroll-inspired losses, U.S. stocks are still looking strong from both the fundamental and technical points of view. The latest U.S. jobs report has shown that the labor market is continuing to improve at a solid pace, which bodes well for the economy as a whole.
One central bank ends QE, another increases it. This is not a trick, but a treat for the markets. The global equity markets found additional buoyancy on Friday after the Bank of Japan surprised the markets overnight by expanding its monetary easing program to about 80 trillion yen a year, up from Y60tn-Y70tn previously.