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Japan's Nikkei soars seven percent on stimulus hopes, short covering

News Date: 15/2/2016 01:34:17
 
Japanese shares surged at the start of the week following a spate of dismal economic data, which nonetheless raised hopes for more stimulus measures from the Bank of Japan and the government. Aiding the stocks further, short traders closed off their selling positions to take profits after an 11-percent slump last week for the Nikkei, the worst since 2008.

Japan's GDP contracted 1.4% on an annual basis in the last quarter of 2015, worse than expectations of a 1.2% contraction, while matching another drop in the second quarter of last year. Revised Industrial Production on the other hand fell 1.7% m/m in December, missing forecasts of a 1.3% fall.

Bank of Japan has surprised investors in its last meeting by cutting interest rates into negative territory for the first time in Japan's history, setting them at -0.1%. Nonetheless, investors still hope for more cuts, or/and an expansion of the assets purchase program the bank has been deploying for a long time now.

Japan's Nikkei index jumped 7.16% to trade at 16,022, climbing above the level of 16,000 again. Other Asian markets were buoyed as well, with Australian shares driving up 1.64%, while Korea's KOSPI added 1.47%. China's shares on the hand lost nearly one percent, after trading was closed for the whole of last week for the lunar new year holiday.

Oil prices recorded small losses on profit-taking, after jumping 12% on Friday on new reports of a possible production cut from OPEC. Brent crude futures slipped seven cents, or 0.21% to $33.30 a barrel, while U.S. crude futures gave up 13 cents, or 0.42% to trade at $29.31 a barrel.  

Precious metals lost their appeal as safe havens as stocks recovered sharply, with gold futures falling 20 dollars, or 1.60% to $1,219 an ounce, while silver futures tumbled 37 cents, or 2.34% to trade at $15.42 an ounce. Copper on the other hand jumped 2.27% to $2.080 a pound.

Investors wait for a stream of data today, with the Eurozone's trade balance for December expected to show a surplus of 22.4 billion euros, slightly lower than November's 22.7B, but still at a largely healthy pace.

From New Zealand, retail sales for the fourth quarter of last year are expected to have grown 1.4% q/q, added to third quarter's 1.6% growth, which is positive for the Kiwi's next trading.

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