Japan’s Nikkei share average surged on May 20 as the local economic growth in Q1 2019 proved better than expected. However, the market gains proved somewhat limited due to the same data also pointing towards a dwindling domestic demand. The Nikkei rose by 0.3% at 21,309.25 as of 0159 GMT.
This data shows that Japan’s gross domestic product (GDP) grew at an annualized 2.1% in Q1 compared to expectations of a 0.2% contraction. Nevertheless, unexpected economic growth came about due to the imports declining faster than exports. The stock markets gain in the Asia powerhouse can be attributed to the surprise GDP growth.
The investors, analysts, and commentators who bet on weak data were caught flat-footed and reversing their earlier positions. But, the Japanese GDP data is not encouraging enough. The private consumption and capex are declining while the exports are rising only due to weak domestic demand depressed imports.
Market analysts believe that the recent market advance is purely technical. Few are buying since they believe that the economy is doing well. The exporters gained slightly as the yen weakened to a 2-week low versus the US dollar.
Komatsu Inc gained 0.25%, Nintendo Co rose 1.25%, Toyota Motor Corp added 0.15%, and Canon Inc rose 1.1%. On the other hand, the technology firms dwindled after their United States counterparts slipped on Friday. The sag came about due to the boiling trade tensions between China and the US.
Sony Corp fell 1.7%, Tokyo Electron shed 2.8%, and Toshiba Corporation dumped 1.1%. The paper manufacturing company, Hokuetsu Corporation, surged 10.7%. This surge came on the wake of the company forecasting a 62.9% operating profit gain for the 12 months ending March 2020.
TYK Corporation lost 17.5% after the manufacturer of heat resistant material forecasted a probable 30.3% decline in its operating profit for this financial year. Among Tokyo’s 33 subindexes, 20 of them were higher. Real estate led the gainers while iron and steel led the losers. The general Topix dipped 0.04% to 1,553.60.
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