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    Nikkei tumbles amid tax hike delay

    Japan’s Nikkei tumbled after the government moved to delay a sales-tax hike for more than two years, bucking mostly higher markets around the region.

    The Nikkei 225 closed 2.32 percent, extending Wednesday’s losses of 1.62 percent.  The Japanese yen strengthened against the dollar, trading at 109.1, compared with levels above 111 yen on Tuesday after Japan’s Prime Minister Shinzo Abe announced a delay of the consumption tax hike until 2019 because of growing softness in the economy. A strong yen is generally a negative for Japanese stocks. 

    "This is not the first time for the consumption tax hike to be pushed back. The second delay this time may have increased investors’ concerns about economic uncertainties and skepticism about Abenomics, as Prime Minister Abe’s economic reform program is called. There are  also other concerns. The postponement of the tax hike raises doubts over the sustainability of Japan’s public debt. Japan’s government debt exceeds 200 percent of its gross domestic product (GDP). 

    Analysts are also concerned that by lessening the chances of an economic slowdown, the move may put the kibosh on further Bank of Japan easing.

     

    Any person acting on this information does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it.


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