Financial Market

Ahead of the game: 09 February 2024

Japan’s preliminary Q4 gross domestic product (GDP) growth rate

Date: Thursday, 15 February at 10.50am AEDT

US equity markets extended their unrelenting grind higher, supported by robust corporate earnings, a series of well-digested US Treasury bond auctions, and expectations of rate cuts.

In Australia, after a rocky start, the ASX 200 stabilised and consolidated near recent record highs ahead of earnings reports next week from companies including CSL, CBA, Telstra, Wesfarmers, Origin Energy, and Whitehaven.

Previously, Japan’s 3Q GDP had shrunk more than expected at an annualised pace of 2.9%, marking its first contraction in four quarters. This reflects the fragility in the Japanese economy, as weaker-than-expected private consumption and corporate investment proved to be a drag.

That said, conditions are set for a modest bounce in 4Q, with expectations in place for Japan’s preliminary Q4 GDP to revert to year-on-year expansion at 1.4% versus the previous 2.9% contraction. Quarter-on-quarter, Q4 GDP is expected to grow 0.3%, improving from the previous -0.7%.

With Japanese policymakers mulling the possibility of exiting its negative interest rate policies this year, a weaker-than-expected GDP print may not provide the conviction that conditions are ready for a raise in policy rate just yet, and that may preclude Japanese policymakers from delivering any major policy changes in its March meeting.

Chart Japanese GDP QoQ

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