Akira Amari, Japan's Minister for Economic Revitalization, has indicated that a second increase in consumption tax will go ahead as planned, saying it is necessary to meet the rising costs for social security and the country’s budget deficit.
Weeks of disappointing data previously caused some advisers to Prime Minister Shinzo Abe to call for a delay in the increase to 10%, due to take effect next October, arguing that the first rise in April, from 5% to 8%, had taken too heavy of a toll.
Amari says that extra monetary and fiscal stimulus will ensure that the tax hike will not endanger the country’s recovery. The government will also offer tax breaks for small businesses to spur capital spending.
Japanese shares rose for the fifth straight session today, led by exporters on the yen's weakness.
The Nikkei hit a eight-month high, climbing 0.3% to 15,948.29, its highest close since Jan. 8. The Topix rose 0.2% to a six-year closing high at 1,313.72, while the JPX-Nikkei Index 400 gained 0.2% to 11,905.53.
Revised figures now show that Japan's real GDP shrank an annualized 7.1% between April and June, topping the 6.8% fall reported two weeks ago, due to a bigger than expected decrease in capital expenditure and decline in consumer spending.
The contraction marks the country's biggest slump since the first quarter of 2009, and puts pressure on Prime Minister Shinzo Abe's decision, expected by year-end, on whether to proceed with a scheduled second increase in the sales tax to 10%.
Japanese shares soared today, led by exporters and the yen slipping to a seven-month low against the dollar. Traders said a planned cabinet reshuffle by Prime Minister Shinzo Abe also supported sentiment.
The Nikkei hit a seven-month high, climbing 1.2% to 15,668.60. The Topix rose 1.1% to 1,297, while the JPX-Nikkei Index 400 gained 1.1% to 11,763.89.
Compared to its previous hike, the Japanese government needs to be more cautious regarding its upcoming decision to raise the national sales tax, warns Vice Economy Minister Yasutoshi Nishimura.
Nishimura highlights that the sharp decline in consumer spending from the 3% tax hike in April is proving prolonged, and hopes that the Bank of Japan will decide on further monetary easing as appropriate.
Meanwhile, Prime Minister Shinzo Abe is to soon decide whether to proceed with the proposed plan of raising the national sales tax even higher, lifting the rate to 10%.
Japanese stocks rose to a three-week high this morning, posting large gains for the ninth consecutive day, as a weaker yen shored up exporters after Fed meeting minutes raised the risk of an earlier interest rate hike.
The Nikkei closed at its highest level since July 31, climbing 0.9% to 15,586.20. The nine-days of straight gains was the index's longest streak since December.
The Topix also gained 0.9% to 1,291.19, while the JPX-Nikkei Index 400 rose 0.9% to 11,752.54.
Japan's economy contracted sharply in the second quarter after a national sales tax in April rose 3% and triggered a sharp decline in consumer spending.
Real gross domestic product shrank 6.8% in the three months through June on an annualized basis from the prior quarter.
Prime Minister Shinzo Abe will have to address the tax issue again soon. A sales tax increase (which will raise the rate to 10%) has been approved by the Japanese government and will take effect in October 2015.
Japanese stocks gained heavily this morning, posting their largest daily jump in four months. Easing tensions in Ukraine, and exporters on the rise due to the yen stepping back from its sharp gains last week - both contributed to the rise.
The Nikkei recouped most of its steep losses from Friday, soaring 2.4% to 15,130.52 - its largest daily percentage gain since mid-April. The Topix climbed 2% to 1,252.51, while the JPX-Nikkei Index 400 gained 2.1% to 11,402.48.
The Nikkei capped a tough week, falling 3% overnight with Obama's ordering of airstrikes in Northern Iraq a convenient excuse for the decline.
Today's session also happens to be the busiest earnings report day of the season and Nikon Corp. tumbled 9.4% after lower full-year guidance, Taiyo Yuden dove 8.9% after cutting its outlook, and Nisshin Steel plunged 9.8% after profit fell 99%.
The BOJ maintained its pledge to boost the monetary base by ¥60T-¥70T.
The dollar is weaker vs. the yen by 0.25%, with dollar/yen down to ¥101.83.
Japanese stocks fell to a more than one-week low this morning, with financials and sea transporters leading the losses, as investors turned risk averse due to the last week's U.S. stock sell-off and concerns over Argentina's default and Portuguese banking problems.
Japanese equities still drew some support from hopes of an improvement in domestic corporate earnings, as well as solid Asian shares and a stable currency market.
The Nikkei sank 0.3% to 15,474.50, its lowest close since July 25, extending losses for a third straight trading day. The Topix shed 0.4% to 1,276.19, while the JPX-Nikkei Index 400 dropped 0.3% to 11,620.36.
Japanese shares fell to a one-week low today and dropped to their largest one-day fall in three weeks after investors turned risk averse due to the downed Malaysian Airlines passenger jet shot down over Ukraine's eastern border.
The Nikkei sank 1% to 15,215.71, its lowest close since July 11. The index also fell 1.7% at one point during Friday's trading.
The Topix shed 0.8% to 1,263.29 at the close of trading in Tokyo. JPX-Nikkei Index 400 dropped 0.7% to 11,505.50.
Japanese shares rose to a five-month high today, after a positive survey on Chinese manufacturing added to gains caused by the Fed's dovish monetary policy. The Nikkei climbed 0.1% to 15,369.28, its highest close since January 29. The benchmark has risen almost 10% since the end of May.
The Topix also rose 0.1% to 1,267.48 at the close of trading in Tokyo, with 1.96B shares changing hands. JPX-Nikkei Index 400 fell 0.1% to 11,537.06.
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