This week witnessed consolidation in Asian markets; between optimistic fundamentals and policy makers' statements, optimism was back to the markets supporting Asian stocks' indices. Concerns about recovery found their way back to Asian markets forcing investors not to be over optimistic and leading to a decline in indices.
Japan's fundamentals released during this week showed much optimism in markets as it started with a widening current account surplus in September as it recorded 1338 billion yen rising from 1233.6 billion yen, while the drop in exports eased to 32.1% from the prior decline of 37.1%.
This was due to a continuous advance in world demand, especially from Asian economies and China above all, in addition to better financial situation for Japanese companies which is enabling their higher performance as exports' value increase, and leading to a trade balance surplus of 599.2 billion yen in September compared with a surplus of 303.7 billion yen in August.
However, Japan's machine tools orders in September, which is a gauge for capital spending, came in at 10.5% following an incline by 0.5%, while it declined 22.0% from a year earlier following a decline by 26.5%.
Such fundamentals ensured that companies in Japan improved their outlook projections for the economy, and it became easier for them to acquire the funding needed for their businesses, which is making it easier to spend on equipments, industrial tools and production lines.
As for the Bank of Japan, it decided in its latest meeting to end the corporate debt buying program by the end of the year, alongside cheerful economic indicators and companies' capability to acquire funds, it's worth mentioning that the BOJ started its rescue program after lowering its benchmark interest rates to 0.10% in December.
Japan's major problem is weak household spending that continued to fall, threatening economic recovery. The weak labor sector and lower income levels are forcing households to cut spending leading to the absence of a main pillar for economic growth that accounts for half of the economy.
Moving to the Chinese economy that released a number of important fundamentals proving the stability in economic conditions in China; despite that concerns are still visible in the economy. Yearly retail sales rose to the highest since February surging by 16.2% in October compared with the previous 15.5%.
On the other hand, industrial production rose 16.1% in October from 13.9% as the Chinese economy was backed by a stimulus plan of 4 trillion yuan which supported the interior front through supporting household spending and providing jobs that helped to boost income levels. However, China worked to invest in infrastructure projects to guarantee sustained growth amid the absence of exports. China's economy expanded by 8.9% in the third quarter of this year and it is anticipated to grow 10% in the fourth quarter.
Regarding the South Korean Central Bank, it decided to keep interest rates at the low record of 2.00% for the ninth month and the bank said that economic activity is improving and that's why the economy found its way to recovery; but uncertainties about the future outlook persist.
