Asian Stocks Drop as Japan Enters Recession; Bonds Rally
Japanese shares tumbled with U.S. index futures and sovereign bonds rallied after the world’s third-largest economy unexpectedly entered recession. Chinese shares fluctuated and the yuan gained as a link between Hong Kong and Shanghai began, while New Zealand’s dollar advanced.
Japan’s Topix index dropped 2.1 percent by 11:31 a.m. in Tokyo as gross domestic product shrank 1.6 percent last quarter from a year before, missing projections for a 2.2 percent gain. Standard & Poor’s 500 Index (SPX) futures slid 0.6 percent and the MSCI Asia Pacific Index lost 0.8 percent. The Hang Seng Index declined 0.8 percent and the yuan strengthened. The yield on 10-year Japanese bonds fell two basis points and Treasuries rose. The so-called kiwi added 0.8 percent.
Japan’s yen briefly fell to the lowest level since 2007 amid speculation the GDP miss will prompt Prime Minister Shinzo Abe’s to postpone a planned sales-tax increase. As investors gain mutual access to China’s biggest stock-trading venues for the first time, the country’s banks reported the biggest jump in bad loans last quarter since 2005. Weaker outlooks in the world’s second- and third-largest economies underscore the challenge for Group of 20 leaders who agreed at the weekend to boost member output by a collective $2 trillion by 2018.
“It’s official, Japan is now in recession,” Jesper Koll, the head of Japan equity research in Tokyo at JPMorgan Chase & Co., said in a Bloomberg TV interview. “The prime minister in all likelihood is going to say, look, we’re going to reduce the likelihood of Japan falling into recession again next year by taking away the VAT hike. Vote for me, endorse me, to stick through with this policy.”
looking forward to it. Should be some good footage and homework on there to study.
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