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updated: 1/11/2013 7:18 AM

Japan's Nikkei jumps on Abe's stimulus package

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  • A man walks by the electronic stock board of a securities firm in Tokyo, Friday.

      A man walks by the electronic stock board of a securities firm in Tokyo, Friday.
    Associated Press

 
Associated Press

BANGKOK -- Japan's Nikkei stock index jumped Friday after Prime Minister Shinzo Abe announced a massive spending package intended to breathe life into the country's moribund economy. But stock markets elsewhere were lackluster.

The Nikkei 225 in Tokyo gained 1.4 percent to close at 10,801.57 following Abe's announcement of an anti-recession stimulus package of more than 20 trillion yen ($224 billion) that is intended to add 2 percentage points to Japan's real growth.

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Abe's Liberal Democratic Party, which won a parliamentary election last month, has promised major public works spending and other measures to revive the economy, which has been mired for years in deflation, or continually dropping prices, which deadens economic activity.

European stocks opened higher, but just barely. Britain's FTSE 100 was less than 0.1 percent higher at 6,016.54. Germany's DAX was marginally higher at 7,712.79. France's CAC-40 also rose less than 0.1 percent to 3,705.86.

Wall Street futures were flat. Dow Jones industrial futures edged down slightly to 13,402. S&P 500 futures also slipped slightly, to 1,466.70.

Stock movements were more pronounced in Asia. Hong Kong's Hang Seng fell 0.4 percent to 23,264.07. South Korea's Kospi lost 0.5 percent to 1,996.67. Australia's S&P/ASX 200 shed 0.3 percent to 4,709.50. Benchmarks in Singapore and mainland China also fell while those in the Philippines and New Zealand rose.

Linus Yip, strategist at First Shanghai Securities in Hong Kong, said the market dips are likely driven by investors who are cashing in shares after recent market rallies.

"Unless there is some exceptional good news, for Hong Kong, they have already shot up to a high level in the short term. There's not a good chance for a breakthrough. So we expect the market goes into consolidation or some profit-taking. The market maybe will have a pullback, especially in the short term."

Monthly inflation data showing a jump in food prices in China didn't help sentiment. The prices of vegetables rose 14.8 percent after a severe winter hurt crop yields.

While below the government's 4 percent inflation target for the year, the monthly inflation rate of 2.5 percent -- a six-month high -- could limit the government's options for responding to any new slowdown in growth.

Among individual stocks, Japan's Sharp Corp. soared 12.6 percent while Fast Retailing gained 4.8 percent. India's Infosys Ltd. surged 16.4 percent after the outsourcing giant reported a smaller-than-expected slide in quarterly profit and raised its annual revenue forecast.

On Thursday, a sharp improvement in Chinese trade boosted helped boost Wall Street despite an uptick in weekly applications for unemployment benefits. The U.S. Labor Department said applications rose 4,000 to 371,000 last week, the most in five weeks.

Michael Hewson of CMC Markets said in an email commentary that the data was a "slight disappointment" but that investors put aside their concerns about the U.S. after China's strong trade data, which suggests global demand might be recovering.

Benchmark oil for February delivery was down 10 cents to $93.72 per barrel in electronic trading on the New York Mercantile Exchange. The contract gained 72 cents to finish at $93.82 a barrel in New York on Thursday.

In currencies, the dollar rose to 89.01 yen from 88.19 yen late Thursday in New York. The euro rose to $1.360 from $1.3254. The euro jumped Thursday after the European Central Bank left its interest rate at the record low of 0.75 percent. In a press conference, ECB President Mario Draghi said the eurozone economy should start to grow again later this year.

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