Japan's Q3 GDP Surprises to Upside, Stocks Rebound

Excerpt from our Wall Street Breakfast, a one-page summary of this morning's key market-moving and stock-moving stories:

Japan's Economy Expands at Twice Expected Annual Pace [Bloomberg]

Summary: Although Q3 (quarter-ended in Sept.) GDP growth was a pleasant surprise to the upside at 2% q-o-q annualized growth -- versus analyst estimates of 1.1% -- it also confirmed weakness in consumer spending, while showing how important exports continue to be. Nonetheless, stocks rallied on the data for their biggest gain in five weeks, led by financial stocks. During the quarter, consumer spending fell 0.7%, exports grew 2.7% and capital investment growth was higher-than-expected at 2.9%. The Bank of Japan concludes a rate decision meeting on Thursday, where it's expected it will maintain its short-term target rate at 0.25%. The BoJ has another rate meeting on Dec. 19, in which more economists now expect a rate hike. This meeting follows revised Q3 GDP data due on Dec. 8, and the BoJ's closely watched tankan, or short-term economic survey due on the 14th. The Japanese economy is currently in its longest post-WWII expansion.
Related links: Additional coverage: BW/AP, FT.com and MarketWatch. Commentary: Mizuho's Quiet NYSE Debut; Japan's Mega Banks' Stocks Slump • No Growth Expected for Japan's Q3 GDP • Sluggish Consumer Spending Dampens Japan's Economic Expansion • Weak Core CPI Keeps Pressure on BoJ to Hold Rates • BoJ Keeps Rate Unchanged; Producer Prices Up Sharply.
Potentially impacted stocks and ETFs: Mizuho Fin. Grp. (MFG) and Mitsubishi UFJ Fin. Grp. (MTU) • ETFs: iShares MSCI Japan Index (EWJ) and iShares S&P/TOPIX 150 (ITF).

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