Japan stocks zoom as poor growth data boosts stimulus hopes

People walk past an electronic stock board showing Japan’s Nikkei 225 at a securities firm in Tokyo, Tuesday, Feb. 16, 2016.

People walk by an electronic stock board of a securities firm in Tokyo, Monday, Feb. 15, 2016.

HONG KONG (AP) – World stocks rallied on Monday, led by a jump in Japan’s main index, amid hopes for more stimulus from central banks in Europe and Japan.

Chinese markets reopen Monday, giving traders the first opportunity to react to global turmoil that has sent the MSCI All-Country World Index down 20 percent from its record in May.

South Korea’s Kospi index rose 1 percent and Australia’s S&P/ASX 200 Index advanced 1 percent. Taiwan’s benchmark was down slightly while markets in Southeast Asia gained.

The nation’s gross domestic product shrank 1.4 percent in the fourth quarter on an annualized basis, more than economists’ forecast for a 0.8 percent contraction.

In wake of the yen’s big rally, Japanese Prime Minister Shinzo Abe said Monday that Tokyo would take action against “excessive currency volatility”.

QUOTEWORTHY: “Together with the recent slump in the Nikkei and the appreciation of the yen, the case for additional easing remains compelling”, said Marcel Thieliant of Capital Economics.

Also Tuesday, the Bank of Japan kicked off its negative-interest rate policy, announced last month, in a bid to stoke commercial bank lending.

Investor sentiment remained positive that central banks would continue to ease monetary policy thanks to comments from the head of the European Central Bank.

In the well-timed interview, carried in the Chinese financial magazine Caixin over the weekend, Zhou also said China would keep the yuan basically stable versus a basket of currencies while allowing greater volatility against the USA dollar.

Its modelling also suggests a hard-landing in the Chinese economy would result in Australia – as a larger exporter of commodities – dipping temporarily into recession in 2016 with the iron ore price tumbling to $US23 per tonne, the terms of trade falling further and a blowout in the budget.

Exports fell 11.2 percent to USD177.5 billion, a sharp deterioration from the 1.4 percent decline reported for December, according to customs data released yesterday. Economists, however, were reserving final analysis until figures for February are out because the timing of the Lunar New Year holiday distorts China’s economic data at the beginning of the year.

WALL STREET: Major U.S. benchmarks ended last week higher, with the Dow Jones industrial average rising 2 percent to close Friday at 15,973.84.

Futures on the Standard & Poor’s 500 Index gained 0.7 percent, with US markets closed Monday for a holiday. The contract climbed $3.23, or 12.3 percent, on Friday to settle at $29.44 a barrel. Brent crude, a benchmark for global oils, fell 9 cents to $33.27 a barrel in London.

The Japanese currency was 0.6 per cent softer at 113.87 yen per dollar in morning trade, but had hit a 15-month high of 110.99 last week as investors flocked to haven investments amid a global market sell-off. The euro slipped to $1.1161 from $1.1167.