Japanese stocks push to fresh multi-year highs

Friday, February 20, 2015

Japanese equity markets extended gains overnight with the Nikkei 225 closing at a fresh fourteen year high and the TOPIX posting gains for the eighth straight session after uncertainty in Europe prompted investors to seek out safety. Japanese equity markets have rallied substantially in recent weeks after the Bank of Japan held off from expanding its stimulus measures further, expressing its confidence in the Japanese economy which was confirmed by the release of better than expected Q4 GDP data released at the start of the week. The yen continues to consolidate sideways around 119.00 against the dollar, holding above the 50 day MA as investors analysed comments made by the economics minister, Akira Amari, who signalled that bullish foreign investors and improving domestic retail demand would see the prospects for the Japanese economy revised upwards. The Bank of Japan is expected to hold off from further stimulus and market participants are anticipating a period of stability for the yen after a period of choppy trading which has seen swings between 116.00 and 120.00 against the dollar, with spikes either side, since the start of the year.

Germany rejected Greece’s requests to extend its bailout which came as a surprise to many market participants. An emergency meeting between the two nations respective finance ministers is due to take place in Brussels today despite a u-turn from the anti-austerity Greek government as they formally requested more time in order to negotiate terms amicable to both sides. However, German officials were reluctant to accept the request after questioning the ambiguity of the wording and accordingly has seen the German finance ministry take a tougher stance, calling on Athens to submit a letter no longer than three sentences in which they would need to request the extension, promise to complete the programme and commit to negotiating any changes with mediators.

A string of important data releases will keep investors engaged throughout the day with eurozone manufacturing and services PMI readings offering further insight into the economic condition in Europe. Despite the absence of Chinese market participants trading volumes were buoyant overnight, however, the positive sentiment seen throughout much of the Asian trading session failed to filter through to Europe, with major benchmark stock indices in the region starting the day on the back foot.

Nikkei 225 rallies higher on European jitters

NKY Index Nikkei 225 Daily 20 2015 02 20 07 41 38

JPY consolidates around 119.00 against the dollar

JPY Curncy Japanese Yen Spot 2015 02 20 07 48 58

Events for today

CN Market Holiday 

0130

JP

Feb

Manufacturing PMI

0700

DE

Jan

PPI

0830

DE

Feb

Manufacturing and Services PMI (P)

0900

EZ

Feb

Manufacturing and Services PMI (P)

0930

UK

Jan

PSNCR & PSNB

0930

UK

Jan

Retail Sales

1445

US

Feb

Markit Manufacturing PMI (P)

OE: 

Jan  FTSE 100 Index & Equity (LIFFE)

OE: 

Mar   Crude WTI (NYMEX)

 

Topics: ECB, PMI, JPY, Greece
More from: Kash Kamal