Japan’s stock market rises buoyed by a weaker yen

Japan’s stock market experienced a notable rise today, buoyed by a weaker yen. The Nikkei index closed with a gain of 0.92%, driven by the yen approaching the 157 mark against the US dollar, which helped support stock markets despite lacklustre economic indicators.

Asian stocks generally saw a decline in thin trade on Monday, with markets in China, Hong Kong, and Australia closed for public holidays. Despite Japan’s gross domestic product (GDP) contracting by a seasonally adjusted 0.5% in the first quarter of 2024, as reported by the Cabinet Office, the stock market managed to show resilience. This contraction was consistent with the previous month’s advance estimate. In the fourth quarter of 2023, GDP had risen by 0.1% on a quarterly basis. When annualised, GDP was revised to -1.8%, an improvement from the earlier estimate of -2.0%. In the preceding three months, GDP had increased by 0.2% year-on-year.

Capital expenditure was revised to -0.4% on a quarterly basis, better than the initially reported -0.8%, while private consumption remained unchanged at -0.7%.

However, public sentiment towards the Japanese economy weakened in May, reaching its lowest point in over a year and a half. The Economy Watchers’ Survey, which assesses current economic conditions, dropped to 45.7 in May from 47.4 in April, indicating growing pessimism. This was the lowest reading since August 2022, when it stood at 45.5. Any reading below 50 reflects a pessimistic outlook.

Fidelity Japan Trust PLC (LON:FJV) aims to be the key investment of choice for those seeking Japanese companies exposure. The Trust has a ‘growth at reasonable price’ (GARP) investment style and approach – which involves identifying companies whose growth prospects are being under-appreciated or are not fully recognised by other investors. 

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