Monday off to a strong start following positive Japanese data

This Monday morning has seen various data releases that have proven to please traders, mainly concentrated around the Japanese economy.  Consequently, the Nikkei has seen an in increase of 3% following the 5% drop it experienced last week.

The world’s third largest economy has indicated that its GDP (Gross Domestic Product) has grown by 1% (quarter on quarter), revised up from 0.9%.

Bank lending has also increased at its fastest rate for three years which has assisted with the apparent recovery in economic conditions.

Much of the economic improvement can be attributed to Prime Minister Shinzo Abe’s strong stimulus policies, one of which has promised $1.4 trillion of quantitative easing, causing bond yields to fall significantly and the value of the yen to drop.  This has in turn helped to increase exports, benefiting Japanese manufacturers.

Another aspect of his economic policy has been to abandon focus on inflation while focusing on pumping money into the economy to encourage growth.  The government still expects to reach its goal of 2% by 2014 while this figure remains in negative territory.

Many would argue that such sever stimulus is necessary following two decades of stagnation, especially when many Asian economies have been growing relentlessly.

Another figure that will please bulls is that the current account surplus reached 750 billion yen, beating median forecasts of 320 billion yen.  This figure is double what it was just twelve months ago and is further good news that the ‘Land of the Rising Sun’ is finally recovering.

On a side note, China released slightly worse than expected Fixed Asset Investment (YoY) and Industrial Production figures.  Retail sales however were in line with forecasts and came in at 12.9%