The Nikkei 225 rose 0.47% over the course of February, with the broad Topix index up 0.49% over the same period. The index neared record levels over the course of the month that had previously been achieved in January. The yen strengthened against the US dollar by 0.42%, which in turn led to the Topix recording its longest losing streak since July 2016.
Data released on the final quarter of 2016 revealed that Japan’s economy grew at an annualised rate of 1% in the period, which suggests ‘Abenomics’ is working. Growth was stimulated by an up-tick in exports and business investment due to the weakness of the yen. However, over the quarter, consumption was stagnant, with no growth when compared to the third. This suggests that Japan’s economy still lacks the domestic demand pressure that it needs to help escape the clutches of two decades’ of on-and-off deflation. Capital spending in Japan looked strong over the last quarter of 2016, capital investment grew 3.8% year on year and surpassed the expected growth figure of 0.8%.
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