Nikkei 225 reaches 30-year high as Japan reports better-than-expected GDP

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Nikkei 225 (N225) the index rose 1.9%, exceeding the 30,000-point threshold for the first time since August 1990, according to data provider Refinitiv Eikon.
Stocks rose after the country posted a stronger-than-expected GDP, with the economy expanding by about 3% between October and December compared to the previous quarter. This translates into an annualized rate of 12.7% and was much higher than analysts expected.
Overall, Japan’s economy fell 4.8% last year to below 5.3% which the International Monetary Fund had forecast. For comparison, the US economy shrank by 3.5% in 2020, while Germany saw its GDP contract by about 5%.

“It simply came to our notice then [performance] confirms that the economy has continued to recover from the pandemic-induced decline, “Stefan Angrick, a senior economist at Oxford Economics, wrote in a research note.

“However, high-frequency data show that momentum began to decline in December amid a recovery in Covid-19 cases.”

Japan is suffering the worst decline in GDP, but it has fared better than others
Japan is currently facing another wave of coronavirus infections, which has led the government to impose a state of emergency in parts of the country.

Angrick said he expected the measures to “withdraw, but not derail, the recovery in 2021, especially as an early lifting of restrictions seems likely.”

Japan has also just given its first approval for a coronavirus vaccine, giving the green light to the Pfizer-BioNTech photo. Sunday’s news further boosted hopes that the recovery could pick up.

“At this stage, Japan’s outlook looks more favorable and the risk of decline is beginning to fade. Not only have local cases in the third wave surpassed the peak, but the approval of the Pfizer vaccine is a significant development that will allow the inoculation boost to start later this week, “said Shahana Mukherjee, an economist at Moody’s Analytics.

“We remain cautiously optimistic about Japan’s recovery in 2021, provided the vaccine is carried out without major disruptions,” she told CNN Business.

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Japan is not the only country reporting better GDP data. On Monday, Thailand and Singapore posted new strong figures, which helped boost investor confidence, according to Jeffrey Halley, a senior Asia Pacific market analyst at OANDA.

Other markets in the region also gathered on Monday, with those in South Korea Kospi (KOSPI) index rose 1.5%. Markets in Singapore, Malaysia, Indonesia and Australia also grew, while trade in mainland China and Hong Kong was closed for the Lunar New Year holiday.

“The basic image is one of a recovery of birth in … Asia [outside of China], “Halley wrote to customers. “The optimistic tone is likely to continue in Europe, unless we receive negative surprises at the end.”

The FTSE 100 gained 1.4% in early trading in London. The German DAX rose 0.4%, and the CAC 40 in France added 1.1%.

– Junko Ogura from CNN in Tokyo contributed to this report.

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