Japanese stocks in bear market but US stocks jump on retail sales

Asian stocks tumbled on Thursday. The MSCI Asia Pacific Index fell 2.2 percent, extending its drop since its 2013 high on May 20 to more than 10 percent.

As usual, Japan led the falls. The Nikkei 225 fell 6.4 percent. It is now more than 20 percent below its high last month, pushing it into bear market territory.

Jim Rogers thinks that Prime Minister Shinzo Abe has “ruined Japan”. He told Fusion MarketSite in an interview that with its “huge debt levels” and “horrible demographics”, Japan's attempt to force down its currency “is a disaster in the long term, and not guaranteed to work in the short term, either”.

Indeed, a report from Bloomberg suggests that Japanese consumer goods companies are “still planning for deflation”.

Felix Zulauf thinks that Japan may also ruin the rest of the world. He told Financial Sense that Japan “will be the root cause of the next big global crisis whenever it breaks out, probably some time over the next 12 to 18 months or so”.

However, Western markets were able to shrug off the decline in Japan on Thursday. The STOXX Europe 600 fell just 0.1 percent while in the US, the S&P 500 jumped 1.5 percent, its second biggest rise this year.

US stocks were boosted by better-than-expected retail sales data. US retail sales rose 0.6 percent in May, the biggest gain in three months.