Asian stocks rose as investors await a decision by Japanese Prime Minister Shinzo Abe to put off a sales-tax increase, add stimulus and call an election, after data yesterday showed the economy entered recession.
Japanese Prime Minister Shinzo Abe is expected to seek an 18-month delay to the second sales tax hike currently scheduled for next October, the Nikkei newspaper reported on Tuesday.
The MSCI Asia Pacific Index (MXAP) gained 0.4 percent to 140.29 as of 9:00 a.m. in Tokyo, after slumping the most in more than a month yesterday. Abe’s administration will announce the plans for the levy and polls today. The government will also order the creation of an economic stimulus package, said Ryu Shionoya, deputy policy chief of Japan’s ruling Liberal Democratic Party.
Japan’s Topix (TPX) index jumped 1.3 percent after dropping 2.5 percent yesterday. South Korea’s Kospi index added 0.5 percent today. Australia’s S&P/ASX 200 Index increased 0.1 percent. New Zealand’s NZX 50 Index climbed 0.2 percent.
Japan's shocking growth numbers released on Monday, which showed gross domestic product shrinking an annualized 1.6 percent in the third quarter after the equally-dismal 7.3 percent contraction in the second quarter, pretty much decided the fate of the planned sales tax hike, analysts say.
Japanese Finance Minister Taro Aso on Tuesday also signaled that the delay may be inevitable, but a further tax increase is unavoidable "regardless of timing."