Japan will remain the dominant theme in today’s session; this prompted a big sell-off in Japan that carried into Europe and will have a bearing on our markets today as well. With not much on the economic calendar and the Q3 earnings season slowly moving into the rearview mirror, this news risks bringing back the global growth fears that had become a big headwind for the markets a month back.
The sales tax changes that the government of prime minister Shino Abe of Japan put into place early this year pushed GDP growth into the negative territory in the June quarter. But everyone expected that to happen; the long-planned sales tax increase had brought forward consumer spending at the expense of the June quarter. But the hope was that spending will get back to ‘normal’ in the September quarter and start ramping up in the final quarter of the year, which will pave the way for the next round of sales tax increases. This is the context in which makes today’s GDP numbers from that country so surprising and disappointing.
This post was published at FinancialSense on 11/17/2014.
Follow on Twitter
Recent Comments