JAPAN: Japanese Nikkei share index opens flat despite a six-year high in business sentiment and as markets await the U.S. budget deadline

Record ID: 238846

  • Title: JAPAN: Japanese Nikkei share index opens flat despite a six-year high in business sentiment and as markets await the U.S. budget deadline
  • Date: 1st October 2013
  • Summary: TOKYO, JAPAN (OCTOBER 1, 2013) (REUTERS) VARIOUS OF PEOPLE WALKING AND COMMUTING TO WORK IN BUSINESS DISTRICT
  • Embargoed: 16th October 2013 13:00
  • Keywords:
  • Location: Japan
  • Country: Japan
  • Topics: General,Economy,Politics
  • Reuters ID: LVA441SQ6S1UNBHHAZFQJFMQ9TAX
  • Story Text: Japan's Nikkei held steady on Tuesday (October 1) despite a sharply positive manufacturer's' sentiment report as investors waited for the deadline that could see much of the U.S. Government begin to shut down -- and potentially crimp growth in the world's largest economy.
    The Nikkei share average advanced 0.4 percent at the open, though rose later in morning trade as it took in the positive news from the Bank of Japan's quarterly "tankan" survey.
    Japanese manufacturers' sentiment improved sharply in the three months to September to a near six-year high, the closely-watched survey showed, cementing the case for Abe to proceed with a planned sales tax increase next year. He is widely expected to announce that sales tax later on Tuesday.
    "I think now, the country finally has its best chance of escaping deflation," said Japan's top spokesperson Yoshihide Suga.
    Abe has cited the tankan outcome as a key factor in deciding whether to raise the sales tax from next April to 8 percent from 5 percent, which is part of a two-stage increase in the tax rate aimed at fixing Japan's tattered finances.
    "We hope to create a positive cycle in which companies start to invest more, leading to further economic recovery which in turn leads to rises in wages and towards a brighter future where the economy is better," Suga said.
    Japan's economy expanded for three straight quarters in April-June, outpacing many G7 nations, as Abe's reflationary policies bolstered household spending and drove down the yen, benefiting exports.
    The BOJ also offered an intense burst of stimulus in April, pledging to double the base money via aggressive asset purchases to achieve its 2 percent inflation target in two years.
    The central bank raised its assessment of the economy in September to say it was recovering moderately. It is widely seen keeping monetary settings unchanged at a rate review on Friday (October 4).
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