Japanese stocks rose on Wednesday as investors held out hope for more robust growth after Prime Minister Shinzo Abe delayed a tax hike and called an early election to seek a fresh mandate for his aggressive policies to shore up the economy.
Abe’s tax-hike delay by 18 months is expected to help the world’s third-biggest economy, which unexpectedly slipped back into a recession in the June-September quarter after an earlier sales tax increase clobbered consumption.
Few expect Abe’s Liberal Democratic Party and its smaller ally to lose their majority, but financial markets and analysts are now contemplating the possibility that the ruling bloc might fare less well than initially anticipated.
Investors are now looking to the Bank of Japan’s policy decision later in the day, and specifically on what BOJ Governor Haruhiko Kuroda would say about the country’s slide into recession and Abe’s decision to delay the tax hike – something Kuroda has said is not advisable.
The BOJ stunned markets last month by expanding its monetary easing programme to pre-empt a slowdown in inflation.
The Japanese yen, which often moves inversely to Japanese stock prices, held near seven-year lows.
The dollar traded at 116.87 yen JPY=, just below its seven-year high of 117.065 hit on Tuesday. The euro fetched 146.51 yen EURJPY=R, having hit a six-year high of 146.69 yen. – Reuters.
