International Markets: Stocks battle to hold the line
Sunday 12 October 1997
Japan's economy, especially domestic spending, has been in the doldrums since the government raised sales tax by 2 points to 5 per cent in April. A tax cut would help, but Taku Yamasaki, chairman of the Liberal Democratic Party's policy research council, said a cut was impossible if it required the sale of deficit-covering bonds. However, opposition politicians may force the LDP's hand. The LDP will release an economic stimulus plan around 20 October.
Investor concern over an apparent lack of government concern over economic weakness was a major factor in pulling the Nikkei stock index down nearly 2.5 per cent last week to an eight-month low of 17,376.92.
"The trend is still down," said Chuck Lambert, a market analyst at Jardine Fleming Securities (Asia). "I think we are reaching a delicate level where if we cannot hold here then we go plummeting to the lows of 1992 or 1995." In 1995 the Nikkei fell close to 14,500. Analysts believe the index will trade between 17,000 and 17,500 next week.
The underlying weakness in Tokyo makes it more vulnerable to influence from New York. On Thursday the Nikkei fell 1.37 per cent on the back of a 1 per cent drop in the Dow on Wednesday. Weakness in US markets can bode ill for Japan's global companies, whose stocks often move in tandem with Wall Street.
Another possible drag on the prices of blue-chip stocks is friction at the US-Japan car market talks in San Francisco. The negotiations are slated to continue through most of the week. The US has accused Japanese car makers of using exports to offset sluggish domestic sales and not promoting imports. "Japan is not fulfilling its promise to achieve strong, domestic-led growth," said Mr Lambert. "The US might decide that enough is enough." But he added there was some room for a rise in stock prices next week, especially if the Japanese government came out with a plan for cutting taxes.
Economic indicators released next week aren't expected to influence bonds greatly as the decline in consumer spending and production after the April tax increase is mostly discounted.
Liam Neeson's Downton dreams
Thriller is set in the secret world of British espionage
Bomber jacket worn by Mary Berry sells out within an hour
Much-loved cartoon character returns - without Sir David Jason
Actress to appear in second series of the hugely popular crime drama
- 2 Scottish independence: What you shouldn't tweet about if you want to avoid jail today
- 3 Scottish independence: Five reasons Salmond is secretly hoping for a 'No' vote
- 4 Isis plan to 'behead random member of the public' in Sydney thwarted by Australian police
- 5 Scottish independence: Andy Murray backs Yes campaign in eleventh hour decision
Thailand beach murders: Thai PM suggests 'attractive' female tourists cannot expect to be safe wearing bikinis
Scottish independence referendum live: Latest news as Scotland votes Yes or No
Scottish independence: Final opinion polls show undecided voters could swing result either way
Scottish independence: Almost half of No voters have felt 'personally threatened' by the Yes campaign
Isis plan to 'behead random member of the public' in Sydney thwarted by Australian police
Daniele Watts: Django Unchained actress detained by Los Angeles police after being mistaken for a prostitute
The political class is doing what Hitler couldn’t – destroying Britain
Scottish independence referendum: A nation divided against itself
Scottish independence: Nationalist leader Jim Sillars threatens pro-union companies with 'day of reckoning' after independence
Scottish independence: David Cameron is becoming the 'George Bush of Britain'
Russia freezes Ukraine into submission: Kiev admits country doesn't have enough fuel for winter
iJobs Money & Business
£320 - £330 per day: Ashdown Group: The Ashdown Group have been engaged by a l...
To £75,000 + Pension + Benefits + Bonus: Saxton Leigh: My client is looking f...
To £85,000 + banking benefits: Saxton Leigh: You will be expected to carry out...
Up to £90,000 + benefits: Saxton Leigh: Credit Risk Audit Manager required to ...