The Nikkei 225 dived 3.3 percent today to close at 12,782.80. The fall was largely due to fears of a US recession, but the data on the Japanese economy recently haven't been very good either. From Bloomberg yesterday:
The leading index fell to 30 percent in January, below the threshold of 50 that signals growth will slow in the next three to six months, the Cabinet Office said today in Tokyo...
Consumer confidence at a four-year low suggests household spending is unlikely to make up for a drop in export demand as the U.S. heads for its first recession since 2001. Business investment fell at the fastest pace in five years last quarter, the Finance Ministry said yesterday, signaling the government will have to trim its gross domestic product estimate next week.
Having no impact on the stock market today was the widely-expected Bank of Japan's decision to leave interest rates unchanged.
The latest BoJ monthly report did acknowledge that although the economy is expected to continue expanding moderately, the pace of growth "is likely to slow for the time being". That could set the stage for a rate cut later this year, especially in view of the nominee for the next BoJ governor. From Bloomberg:
Japan's Prime Minister Yasuo Fukuda nominated Toshiro Muto to head the central bank, setting up a confrontation with the main opposition party, which has indicated it may block the appointment.
Bank of Japan Governor Toshihiko Fukui, whose policy board left interest rates at 0.5 percent at his last meeting today, ends his five-year term March 19. The Democratic Party of Japan claims Deputy Governor Muto's background as a Finance Ministry official risks giving the government undue influence over monetary policy...
"Muto is probably less hawkish than Fukui, which means he feels less reticent about a rate cut and more cautious about a rate increase," said Mamoru Yamazaki, chief Japan economist at RBS Securities in Tokyo.
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