TOKYO: Japanese equities jumped in early Tokyo trading, recouping most of last week’s losses as China’s currency stabilises.
Japan’s Nikkei 225 rose 0.7 per cent in early trading after a slightly better than anticipated second quarter GDP report. The broader Topix rose 0.8 per cent.
The GDP figures indicate Japan’s economy shrank last quarter, but the 1.6 per cent annualised decline was shallower than forecasts and first quarter figures were slightly revised up.
Before the numbers hit, futures markets were predicting a mild gain of just 0.1 per cent gain.
The Nikkei fell 1 per cent last week after China unexpectedly devalued the renminbi and said it would give markets more of a say on where the currency’s fix, or reference rate, will be set in each morning. The move prompted talk of a possible currency war as Asian currencies fell by an average 2 per cent — the biggest weekly decline in four years.
The PBoC held a rare press conference late last week to quell concerns of currency volatility. This morning the offshore-traded renminbi was 0.05 per cent stronger in early trading, indicating investors outside the mainland don’t see a high risk of further big declines.
“As concerns over the [renminbi] continue to ebb, and with the prospect of further rises in the USD in the lead up to the Fed’s meeting, the Nikkei may well recover last week’s losses this week,” said Angus Nicholson at IG.
