Japan’s Technical Recession Hits Stocks and Energy

Data showing Japan slipped into recession in the third quarter raised concerns on Monday about global economic health, hitting stocks and the price of oil.

European shares fell, before recovering slightly, and Wall Street looked set to open lower, according to index futures ESc1 1YMc1.

Tokyo’s Nikkei index .N225 lost 3 percent, its biggest one-day drop since August, after the news that the world’s third-largest economy unexpectedly shrank by an annualised 1.6 percent in July-September.

This followed a 7.3 percent contraction in the previous quarter, caused by a rise in national sales tax, and ran counter to economists’ forecasts for a 2.1 percent rebound.

The data initially pushed the yen to a seven-year low against the dollar, but as Tokyo stocks fell the Japanese currency rebounded.

The news also shaved $1 off the price of Brent crude oil, as demand would fall if economies slide, and sent ripples across Europe, where the FTSEurofirst 300 .FTEU3 pan-European share index was down 0.1 percent, having pared earlier losses.

via Reuters

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Alfonso Esparza

Alfonso Esparza

Senior Currency Analyst at Market Pulse
Alfonso Esparza specializes in macro forex strategies for North American and major currency pairs. Upon joining OANDA in 2007, Alfonso Esparza established the MarketPulseFX blog and he has since written extensively about central banks and global economic and political trends. Alfonso has also worked as a professional currency trader focused on North America and emerging markets. He has been published by The MarketWatch, Reuters, the Wall Street Journal and The Globe and Mail, and he also appears regularly as a guest commentator on networks including Bloomberg and BNN. He holds a finance degree from the Monterrey Institute of Technology and Higher Education (ITESM) and an MBA with a specialization on financial engineering and marketing from the University of Toronto.
Alfonso Esparza