Japan
In a two-day, holiday-truncated trading week, Japanese stocks advanced on Tuesday and gave back their gains on Wednesday, Nikkei
225 Stock Average advanced for a sixth consecutive week, the gain was a mere handful of points closing on Wednesday at 22,472.78.
All the major Japanese stock market indexes are under water in 2018. Year-to-date, the Nikkei is off 1.3%, the large-cap TOPIX Index is
down 2.5% and the TOPIX Small Index is 2.3% lower.
The yen was little changed closing trading on Wednesday at ¥109.2 per U.S. dollar, which is about 3.1% stronger than the ¥112.7 level
at the end of 2017.
PMI data suggest economy is recovering from first quarter soft patch, Nikkei-Markit manufacturing purchasing managers' index (PMI)
rose to 53.8 in April, according to the revised final figures released on Tuesday up from the preliminary 53.3 flash index reading and
53.1 in March.
Particular concern had been the slowdown in exports because of yen strength, which is problematic for the export-heavy
manufacturing segment.
According to the Bank of Japan’s (BoJ) outlook report, gross domestic product (GDP) growth for fiscal year 2018 (ending March 2019) is
expected to be 1.6% versus the prior estimate of 1.4%.
The core consumer price index (CPI) estimate for fiscal 2018 was lowered by the central bank to 1.3% from 1.4%, outlook report left its
CPI estimate for fiscal 2019 unchanged at 1.8%.
Raising the long-term interest rate target and reducing the pace of BoJ asset purchases could begin later this year, representing the
first steps in policy normalization, said Sayuri Shirai, a former central bank board member and International Monetary Fund economist
who has close contacts with Japanese and overseas policymakers.
China
China manufacturing indexes stay resilient amid tariff spat with U.S, a trio of economic indicators showed that China’s manufacturing
and services sectors stayed resilient in April despite U.S. trade tensions, though an export slowdown signaled possible trouble ahead
for a key growth engine.
China’s official manufacturing purchasing managers’ index (PMI) declined less than expected, to 51.4 in April from the previous month.
Analysts closely watch China’s PMIs for clues about the strength of global demand, but several subindexes in the various gauges
signaled heightened uncertainty for exports, an important driver for China’s economy.
Despite concerns about a U.S.–China trade war, investment analysts believe that China’s intermediate-term outlook is solid and that
Beijing’s commitment to deleveraging the economy poses a greater growth risk than tariffs. Additionally China’s premier announced
an annual economic growth target of about 6.5% for this year, unchanged from 2017.
Source: Galt & Taggart
