HONG KONG: Asian markets rallied Monday following last week’s sharp losses, with Tokyo boosted by a report that Japan’s prime minister plans to delay a planned sales tax increase.
Investors in Tokyo cheered a report Saturday in the respected Nikkei business daily that Shinzo Abe had told officials he wants to put off the consumption tax rise to avoid damaging the already tottering economy. It is not known how long he intends to postpone
The last rise in April 2014—the nation’s first in 17 years—was blamed for stalling a nascent recovery and pushing Japan into a recession from which it has hardly recovered.
While experts say Tokyo must raise tax revenue to deal with soaring debts and pay for the ballooning cost of welfare as the population ages, a delay is seen as crucial to support economic growth.
Attention now turns to the release Wednesday of economic growth figures for the first quarter of the year.
The Nikkei closed 0.3 percent higher, with a weaker yen also providing support.
Speculation the Federal Reserve could raise borrowing costs sooner rather than later boosted the dollar after data Friday showed US consumer spending jumped far quicker than expected in April, reversing a worrisome stall in the first quarter of the year.
The greenback bought 108.78 yen in the afternoon, up from 108.63 yen in New York.
However, the prospect of another increase in interest rates hit New York traders. All three main indexes ended lower Friday.
Among other Asia markets Hong Kong ended up 0.8 percent in the afternoon and Sydney closed 0.6 percent higher while Seoul gained 0.1 percent.
Shanghai ended 0.8 percent higher. Central bank assurances that it would continue with policies to support growth overshadowed weekend figures showing more weakness in the economy.
Industrial output, retail sales and fixed-asset investment all came in below expectations, the latest disappointing data out of Beijing following below-par trade figures the previous weekend.
While shares rose in Chinese markets, Stephen Innes, senior trader at OANDA Asia Pacific, said in a market commentary: “Clearly, the positive economic momentum in March has apparently turned soft in April, which will likely send negative reverberations across all asset classes.”
Shares in energy firms rose in line with oil prices as a slowdown in US drilling and an increase in Chinese crude refinery processing bolstered hopes a supply glut would ease sooner than expected.
West Texas Intermediate and Brent each put on 1.4 percent Monday.
Last week the two contracts surged as the International Energy Agency said the glut could ease in the second half of this year and OPEC oil producers said the oversupply may be easing on reduced output by its members.
“There is evidence that the market is moving back toward balance,” Michael McCarthy, chief strategist at CMC Markets in Sydney, told Bloomberg News.
In Europe, London was 0.5 percent down in early trade and Paris sank more than one percent but Frankfurt put on 0.9 percent.