Japanese sales tax hike postponed again ahead of new economic policy
On June 1, 2016, the Japanese Nikkei 225 was weighed down by a strengthening yen, which may negatively affect exporters. The move was majorly driven by a statement by Japanese (EWJ) Prime Minister Shinzo Abe to delay the planned rise in sales taxes. The sales tax was scheduled to be increased from 8% to 10%.
This is the second time the sales tax hike has been postponed. Abe rolled out the new economic agenda on June 2, with redistribution of wealth as a major focus. The new strategy was approved by the cabinet before the formal announcement. The government also aims to increase the birth rate to 1.8 to fix one of the biggest issue facing Japan: an aging population.
Manufacturing PMI releases in the Asia-Pacific region
The NBS manufacturing PMI (purchasing managers’ index) for China (FXI) remained constant at 50.1 in May, in line with the previous month and marginally above expectations of 50. The Chinese nonmanufacturing PMI fell slightly to 53.1 in May from 53.5 in April. The manufacturing PMI increased in May for Malaysia and Japan, while it fell for Indonesia (EIDO) and Taiwan (EWT).
Australia’s GDP rises
Australia’s (EWA) GDP rose by 3.1% on an annual basis in the first quarter in comparison to 2.9% in 1Q15. This was the fastest growth since the third quarter of 2012. On a quarter-over-quarter basis, the Australian economy grew by 1.1% in the first quarter as compared to growth of 0.7% in 4Q15.
In the final part of this series, we’ll see how the possibility of Brexit is affecting European markets.