Shares in Tokyo rose Tuesday on expectations the Japanese government will respond to a recession by postponing a sales tax hike and launching new stimulus. Other Asian markets were muted.
KEEPING SCORE: Tokyo's Nikkei 225 index rose 1.9 percent to 17,296.89 and Seoul's Kospi added 1.2 percent to 1,966.46. The Shanghai Composite Index shed 0.6 percent to 2,459.12 and Hong Kong's Hang Seng declined by 0.7 percent to 23,626.14. India's Sensex added 0.3 percent to 28,255.09. Singapore and New Zealand were up, while Sydney declined.
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JAPAN: The economy's contraction in the latest quarter, despite the "Abenomics" strategy of loose monetary policy, higher spending and structural reforms, prompted expectations Prime Minister Shinzo Abe will postpone a sales tax hike due in October 2015 and might call new elections. Finance Minister Akira Amari suggested there was a high chance of a stimulus package. Japan's economy, the world's third largest, has now contracted for two quarters in a row, meeting the definition of a recession.
ANALYST'S TAKE: "The recession read now squarely asks the question: is Abenomics a failure? Is it even able to influence the structural issues facing the Japanese economy? The jury remains divided," said Evan Lucas of IG Markets in a report. "However the response to the GDP figures was obvious — when in doubt, spend your way out."
GERMANY: The ZEW measure of investor sentiment due out Tuesday is expected to show a small improvement after 10 months of declines. "Any improvement is likely to have been tempered by the slightly disappointing German industrial data for September and fears that Russia's economic hardships are worsening," said Jennifer McKeown of Capital Economics in a report. The survey of investment analysts is more forward-looking than other economic data.
WALL STREET: The Standard & Poor's 500 rose 0.1 percent to a record of 2,041.32 and the Dow Jones industrial average also added 0.1 percent to 17,647.75. Strong corporate earnings and U.S. economic data helped to offset Japan's slide into recession. The Nasdaq composite fell 0.4 percent to 4,671.
ENERGY: Benchmark U.S. crude declined 29 cents to $75.34 per barrel in electronic trading on the New York Mercantile Exchange. The contract shed 18 cents on Monday to close at $75.64. Brent crude, used to price international oils, shed 39 cents to $78.92 per barrel in London after losing 10 cents on Monday.
CURRENCY: The dollar declined to 116.51 yen from Monday's 116.71 yen. The euro rose to $1.2473 from $1.2462.