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Nikkei 225 Index Rebounds 3 Percent on Positive Data

In early trading Monday, the Nikkei 225 Index was up 3.2 percent. The index moved out of bear market territory to rise 408 points to 13,286.34.

The bounce came on the back of a positive revision to Japan’s first-quarter real gross domestic product. The new data show that the economy jumped 1 percent from the previous quarter–higher than analyst consensus. This signals to investors that Prime Minister Shinzo Abe’s stimulus plan might be working better than investors believed.

The KOSPI was up fractionally and the Shanghai Composite was down 1.4 percent. The Australian as well as the Chinese markets were closed for holiday.

The yen is fractionally weaker against the dollar–another reason the Nikkei 225 index was up early Tuesday.

Investors will watch the Bank of Japan’s two-day meeting that starts Monday. World markets want to see the country take further, more drastic steps to curb the extreme volatility present in the Nikkei of late.

The strength is further bolstered by the positive day in the US equity markets on Friday. Traders will look for follow-thru in US markets on Monday.

Ed Rogers, CEO & CIO, Rogers Investment Advisors, said, “20 years of poor performance in the Japanese economy is not going to correct itself overnight but the expectation of improvement is necessary for the actual improvement to take place.”

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