Following the decision of the Bank of Japan to maintain existing monetary policy, Japanese stock index Nikkei Stock Average has significantly declined. From the level of 19950 at the beginning of December, the index fell to 14790 in February losing almost 4000 points. Expansion of quantitative easing program introduced by the Bank of Japan on 29 January, as well as the negative interest rate of -0.1% for the commercial banks’ deposits exceeding established norms of reservation, did not bring notable results, failing to change downtrend of the Japanese stock market.

Since the beginning of February the decline in index Nikkei, as well as rise of the Yen has rapidly resumed. However, since the end of last week the price of index Nikkei rebounded from the level of 15120 and reached 16270 (Fibonacci 23.6%). The USD and global stock markets were supported by the US retail sales data released last Friday. The data was better than expected, inhancing investors’ opinion about the state of economy and inflation rate in the USA.

Global stock markets recovered on Monday when the head of ECB, Mario Draghi said that ECB was ready to introduce additional incentive measures in needed.

Today, despite the decline in Asian session, index Nikkei rose in European session.

Investors are more optimistic about the prospects of economic recovery in the world, which is reflected in sales of gold and Yen and purchase of the risky stock assets.

However, the recovery in the stock market is a long-term prospect.

Japanese economy is slowing down too. Industrial production in Japan fell by 1.7% in December and by 1.9% on annual basis. Use of capacities also dropped (-1.0% in December), business activity index in the service sector fell by -0.6% in December versus 0.9% in Novemberв ноябре, GDP fell by 1.4% on annual basis in Q4. This data from Japanese Ministry of economy was released earlier this week.

Based on the deteriorating economic performance the Bank of Japan might introduce additional measure to mitigate economic conditions in the country at the meeting on 14-15 March.

Index Nikkei Stock Average and the pair USD/JPY will grow, but the rise will depend on the measures of Japanese bank.




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