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Nikkei jumps and yen dives as Abe plans tax cut
A report published on Tuesday said Prime Minister Shinzo Abe wants to cut the country’s corporate tax rate to help offset a two-stage increase in sales tax.
Coupled with stronger-than-expected economic data showing machinery orders had climbed, the news helped push the Nikkei up 2.4% to 13,847 as investors reacted favourably to the prospect of a tax break.
Exporters were among the biggest winners following a slide in the value of the yen, which itself tumbled on the corporate tax cut news.
The yen fall 0.5% overnight against the dollar to 96.7.
A lower corporate tax rate is expected to boost foreign investment into the country and benefit manufacturing firms.
The bounce overnight followed falls the previous day on lower-than-expected GDP growth.
Yesterday’s growth figure came in one percentage point below economists’ expectations at 2.6%.
Elsewhere overnight, the S&P 500 halted its recent rally, closing down 0.12% at 1,689, while the Dow Jones was flat at 15,420.
The FTSE 100 also finished Monday relatively flat at 6,574, despite renewed confidence in China lifting mining stocks, as investors awaited more key updates from Europe and the UK.
Later today July’s inflation data in the UK will be announced.
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