Asian markets upbeat as Tokyo gets GDP boost

AFP/Tokyo

Workers loading a container onto a cargo ship at a port in Tokyo yesterday. Japan’s economy contracted at a slower pace than expected in the second quarter as output and exports recovered from the deadly earthquake in March, but a soaring yen and slowing global growth cloud the outlook for an economy emerging from recession

Asian stocks put on solid gains yesterday, with Tokyo getting a boost from better-than-expected GDP figures that showed the country is on the road to recovery after its devastating tsunami. Asia followed a positive end to Wall Street’s week with green screens all over the region giving dealers hope after a turbulent few days during which they were battered by eurozone debt fears and a US credit downgrade. Tokyo closed 1.37%, or 122.69 points, higher at 9,086.41 and Sydney jumped 2.64%, or 110.3 points, to 4,282.9. Hong Kong rocketed 3.26%, or 640.09 points, to 20,260.10 and Shanghai was 1.30%, or 33.60 points, to the better at 2,626.77. Seoul was closed for a public holiday. In New York on Friday the Dow Jones Industrial Average finished up 1.13%, at 11,269.02, taking its net loss over a very volatile week to just 1.53%. Global markets had been roiled after the head of the European Commission said the eurozone debt crisis had likely spread from the peripheral states. Then ratings agency Standard & Poor’s downgraded the US’ credit rating, sending traders into a panic and stoking fears the world’s number one economy was heading for a double-dip recession. The week started strongly in Asia, with dealers in Tokyo taking heart from figures showing the economy shrank an annualised 1.3% in the April-June quarter following the March 11 quake and tsunami. The markets had been expecting a 2.7% contraction. Post-disaster falls in consumer spending and in April exports were the main causes of the third straight quarterly contraction, analysts said. But other recent data have started to show signs of recovery in the world’s third biggest economy, as industrial supply chains have been restored and post-quake reconstruction has picked up along the tsunami-hit coast. “I think we will see clear signs of recovery in the July-September quarter,” said Taro Saito, a senior economist at NLI Research Institute. Japan’s triple calamity five months ago killed more than 20,000 people, devastated large areas of the northeast and sparked a nuclear crisis at the Fukushima plant, which continues to leak radiation into the environment. The disaster also caused power shortfalls that have forced a summer electricity saving campaign. Only 15 of Japan’s 54 nuclear reactors are now operating, with more due to cease operations soon for regular checks. Japan’s Cabinet Office last Friday cut its economic growth forecast for this fiscal year to 0.5%, from 1.5%, but said it expects growth to recover to between 2.7 and 2.9% in fiscal year 2012. But the positive figures could be tempered by the stubbornly strong yen, which crimps the earnings of exporters—a key driver of the economy—and appears all but immune to the sabre-rattling of the Japanese government. In other markets Manila closed 0.25%, or 10.90 points, higher at 4,332.63; Taiwan rose 2.39%, or 182.37 points, to 7,819.39; Wellington closed up 1.12%, or 36.13 points at 3,252.63; Singapore rose 0.84%, or 23.81 points, to 2,874.40; Kuala Lumpur ended up 1.08%, or 16.07 points, to close at 1,499.74; Jakarta rose 1.79%, or 69.49 points, to 3,960.02; Bangkok rose 2.28%, or 24.25 points, to 1,086.32.