Tradeline Financials - Asian Markets Update - Week 33, 2014
Markets in Asia were mixed today as weak data out of China and Japan saw both markets react differently.
The Nikkei 225 hit record highs to finish the day 0.66% up on Wednesday's trading. News on the Japanese economy did little to sway investors as they were told that annualized, the economy fell 6.8% in the 2nd quarter, its biggest drop since the 2011 Tsunami. Although predicted to be worse at 7.1% the data is still disappointing especially as the first quarter posted a 1.5% increase on the year before. The 2nd quarters poor performance is largely placed on the sales tax increase implemented in April and the fact that businesses and individuals have refrained form spending on large purchases however this is expected to pick up later this year. With an economy that grew 6.1% in the first quarter of 2014 over 2013, the 2nd quarter performance is significantly poorer and a turnaround in the 2nd half of 2014 should be on the cards.
Chinese markets reacted mutely to economic data showing a slight slowdown in the 2nd quarter. With Retail Sales and Industrial Production both under their previous month the 2nd largest economy in the world has started to show signs of slowing down. Industrial Production of June was up 9.2% and July only managed 9%. Retail Sales which broke 12.4% in June, only managed growth of 12.2% for July. The fall in growth has been forecast as early as the first quarter yet the figures are still strong compared to similar economies. With a PMI figure of 51.7 for July up from 51.0 in June the economy appears to largely be being driven by exports which saw a significant increase from July 2013, up 14.5%. The 2nd largest economy has been pegged to expand by no more than 7.5% this year and to achieve that they will need to implement further stimulus such as they have so far this year. Tax breaks for small businesses and improvements to infrastructure are certainly a way forward and have shown that they are helping the economy move forward. What many say is need now is a reduction in the red tape it takes to get anything done in Chinese commerce.
Major Indices as of 14th August 2014:
Hang Seng - 24,790.39 -0.40%
Dow Jones - 16,651.80 +0.55%
FTSE 100 - 6,656.68 +0.37%
DAX - 9,198.88 +1.43%
MICEX - 1,398.85 +1.79%
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