Nikkei Rocked by Weak Data – Is the Perfect storm Brewing over Japan?

We’ve seen in recent times how a major economy missing the mark by a tiny amount can lead to a mass sell off and plunge in stock prices. So what happens when one misses analysts expectations by a lot?

Today gave us a glimpse into just such a scenario. The Nikkei was down 750 points in afternoon trade after Machinery Orders for November fell a whopping 14.4%, falling far short of the expected 7.8% prediction for the MoM data.

YoY data for machinery orders also failed to meet expectations. Analysts had estimated that YoY orders would gain 6.3%, but in actual fact, they only delivered a 1.3% gain.

All of this spells bad news for Japan as machinery orders are widely regarded as a glimpse into overall manufacturing and industrial production. With orders dropping steeply, an obvious red flag presents itself and alerts investors to the fact that this sector of the economy is slowing.

Combined with China slowdown fears and a bleak global economic outlook in the coming year, is a perfect storm brewing over Japan?

Certainly the export-fueled economy was expected to suffer in the midst of a slowdown. A 700 point drop in a single morning, however, reveals that fears are deeper and more immediate than many had thought.

2016 has been a rough start for Asia, and today brings the chickens home to roost in Japan.

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Daniel Simmons