The Nikkei 225 [JAPAN225] rose tentatively after headlines of Japan’s recession sent it toppling yesterday.
Financial markets felt the force of Japan’s recession hitting, especially on the Nikkei as it fell on Monday by over 3 percent. Much of that fall was recovered by today with the Nikkei rising from a low of 16915 to 17410 (10.41am GMT), taking it close to the highs it reached in April 2007.
The rescue has been credited to several factors:
Prime Minister Shinzo Abe’s announcement that the second consumptive tax hike will be delayed and that he will be calling a snap election. As his party, the Liberal Democrat Party (LDP), have a lead in the votes, he is expected to stay in power and continue with his economic policy track.
Several mega-deals were made across stocks, stimulating the markets: Pfizer and Merck anti-cancer tumor deal worth $850 million upfront with Merck receiving another $2 billion in milestone payments; Halliburton buying Baker Hughes for $35 billion; and Allergan in a buyout deal worth up to $65.5 billion to Actavis.
Mario Draghi, ECB President announcing that sovereign bonds were on the shopping list for the central bank to provide more stimulus.
Amongst the beneficiaries of the day, the Australian dollar fared well as investors rejected Japan and euro zone for other open markets. AUDUSD rose to 0.87302 to reverse Monday’s fall.
However, oil felt the fallout of Japan’s recession news as the world’s fourth biggest crude importer increased worries of inventory surpluses. It was the Russian/ Venezuela plan to defend prices that may have kept oil from falling further.
MT4 chart for Nikkei [Japan225]
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