Japanese Stock Market Rebounds on Expectations of Expanded Government Economic Stimulus

[Image source=AP Yonhap News]

[Asia Economy Reporter Hyunwoo Lee] The Japanese stock market, which started off lower following a more than 7% plunge in the New York stock market the previous day, reversed to an upward trend amid growing expectations for expanded economic stimulus measures by the Japanese government. Indications that the U.S. Donald Trump administration is considering economic measures such as tax cuts also shifted investor sentiment.

As of 2 p.m. on the 10th, the Nikkei 225 index was at 19,733.10, up 0.17% from the previous day. Earlier that day, the Nikkei index closed the morning session down 1.49% at 19,405.57. During the session, it briefly fell below the psychological support level of 19,000 to 18,891.77, marking the lowest level in 18 months. However, expectations for additional economic stimulus from the Japanese government and remarks by U.S. President Trump about reviewing economic measures helped the market turn upward.

As expectations for economic stimulus stabilized investor sentiment, the yen, which had surged due to safe-haven demand, declined in value. As of 2 p.m. on the 10th, the dollar-yen exchange rate was 104.87 yen, up 2.3% from 102.36 yen the previous day. When the dollar strengthens against the yen, the yen’s value falls, and vice versa.

On the same day, Japanese Prime Minister Shinzo Abe stated at a cabinet meeting, "We will cooperate with national institutions and the Bank of Japan and, if necessary, respond appropriately in accordance with agreements among the Group of Seven and Group of Twenty countries." Bank of Japan Governor Haruhiko Kuroda also said at a session of the Japanese parliament’s Finance Committee, "We will not hesitate to take appropriate measures as needed." These remarks increased expectations for additional fiscal spending as part of the government’s economic stimulus measures.

Earlier, President Trump’s comments about reviewing economic measures such as tax cuts also influenced investor sentiment. At a press conference held at the White House that day, President Trump said that discussions were underway to reduce the 'payroll tax' in response to the economic impact of the COVID-19 outbreak. The payroll tax is levied on earned income up to a maximum of $132,900 and is distinct from the 'income tax.' In the U.S., income tax is differentiated into seven brackets ranging from $9,700 (10%) to $510,301 (37%) based on individual income levels beyond earned income.

This content was produced with the assistance of AI translation services.