Japanese Stock Market Rallies
Despite disappointing economic news, the Japanese stock market rallied on Wednesday in anticipation of monetary easing by the Bank of Japan.
The Japanese stock market rallied on Wednesday, despite some awful economic news, as investors anticipated an announcement of more monetary easing. The announcement is expected to follow the conclusion of a two-day 
policy meeting of the Bank of Japan. The likelihood of more easing caused the yen to fall and stocks to surge (NYSEARCA:FXY). The Nikkei 225 Stock Average skyrocketed 2.39 percent to 10,160 (NYSEARCA:EWJ). As was the case during the early days of quantitative easing in the United States (spring of 2009) investors ignored the latest unpleasant economic data. Japan’s Finance Ministry reported that the nation’s exports fell to the lowest level in five months, declining 4.1 percent in November on a year-over-year basis. Exports to Europe fell by nearly 20 percent and exports to China dropped by 14.5 percent. Japan’s imports increased by 0.8 percent, widening the nation’s trade deficit to 953.4 billion yen, or 11.4 billion dollars. Japan’s Election Results Have Uranium Bulls Ready to Charge
Germany’s Ifo Institute reported that its Business Climate Index rose to 102.4 in December from 101.4 in November, beating economists’ expectations of an increase to 102.0 (NYSEARCA:EWG). The news gave a boost to all of the major European stock indices (NYSEARCA:VGK). With German Growth Slowing, Time to Take Some Profits?
As of 11:09 EST, the Euro STOXX 50 Index advanced 0.45 percent to 2,655 – staying above its 50-day moving average of 2,535. The STOXX 50 is holding above its March 19 high of 2,608 (NYSEARCA:VGK). The FTSE 100 Index climbed 0.54 percent to 5,968 (NYSEARCA:EWU). The German DAX Index rose 0.29 percent to 7,675 (NYSEARCA:EWG). France’s CAC 40 Index advanced 0.48 percent to 3,666 (NYSEARCA:EWQ). Spain’s IBEX 35 Index jumped 1.24 percent to 8,270 (NYSEARCA:EWP). Italy’s FTSE MIB Index surged 1.03 percent to 16,322 (NYSEARCA:EWI).
As of 11:19 EST, the euro advanced 0.24 percent against the dollar, trading at $1.3260 (NYSEARCA:FXE).
Spain’s ten-year bond yield fell to 5.25 percent on Wednesday from Tuesday’s closing level of 5.29 percent. Spain’s two-year bond yield declined to 2.83 percent on Wednesday from Tuesday’s closing level of 2.86 percent (NYSEARCA:EWP).
Italy’s ten-year bond yield sank to 4.40 percent on Wednesday from Tuesday’s closing level of 4.47 percent (NYSEARCA:EWI).
On London’s ICE Futures Europe Exchange, February futures for Brent crude oil advanced by 85 cents (0.78 percent) to $109.69/bbl. (NYSEARCA:BNO, NYSEARCA:USO).
February Gold futures declined by $1.70 (0.10 percent) to $1,667.80 per ounce (NYSEARCA:GLD).
In China, stocks were mixed despite a report from the World Bank, which focused on anticipation that China’s economy will expand in 2013. The Shanghai Composite Index dipped 0.01 percent to 2,162 (NYSEARCA:FXI). Hong Kong’s Hang Seng Index advanced 0.57 percent to 22,623 (NYSEARCA:EWH).
American stock index futures were in positive territory ahead of Wednesday’s opening bell as early morning optimism about progress in the budget negotiations encouraged investors. The March 13 Dow Jones Industrials future advanced 0.28 percent to 13,313 as of 9:13 EST. The March 13 S&P 500 future rose 0.31 percent to 1,445 (NYSEARCA:SPY). The March 13 Nasdaq 100 future climbed 0.37 percent 2,711.
Bottom line: As was the case during the first American quantitative easing program in the spring of 2009, the power of monetary easing overwhelmed disappointing economic news on Wednesday. In Japan, the Nikkei 225 Stock Average skyrocketed 2.39 percent to 10,160 despite a 4.1 percent drop in the nation’s exports.
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