Japan Stocks Swing as Strong GDP Clouds Stimulus, Tax Outlook

Japanese stocks swung from a loss to a gain as investors weighed whether data showing the economy grew faster than forecast in the first quarter reduces the need for further stimulus and a delay to a planned sales tax hike.

The Topix index rose 0.8 percent to 1,346.13 at the lunch break in Tokyo, fluctuating from a 0.6 percent loss. The Nikkei 225 Stock Average added 0.6 percent to 16,753.55 after data showed gross domestic product expanded an annualized 1.7 percent in the three months through March, beating economist estimates for 0.3 percent growth, and averting a recession. The economy shrank a revised 1.7 percent in the previous quarter.

The GDP numbers support the Bank of Japan’s surprise decision at its last meeting to forgo additional monetary stimulus. The focus now shifts to whether Prime Minister Shinzo Abe will push ahead with a planned sales-tax increase. The market was boosted on Monday by a Nikkei newspaper report over the weekend that the government was planning to delay the tax hike. The government has denied the report and Abe told parliament on Tuesday he will go ahead unless there is a “serious event.”

Futures on the S&P 500 rose 0.1 percent after the underlying U.S. equity gauge slumped 0.9 percent on Tuesday. Losses accelerated in afternoon trading as reports on inflation and housing bolstered speculation the Federal Reserve will raise interest rates as early as June.

Source: Bloomberg

PT Bestprofit Futures – MARKET