Japan's stockmarket rally resumes

Japanese stocks have bounced recently as investors calm down about QE 'tapering' and China’s credit squeeze, and are cheered by positive domestic data.

Japanese stocks have bounced over the past few days. Global jitters over the US Federal Reserve reducing its money-printing programme have eased, as has China's credit squeeze. This has helped all equity markets, but the latest data from Japan itself has also cheered investors.

The quarterly Tankan survey of business sentiment this week revealed the first positive reading for large manufacturers since 2011. Deflation is easing and the slump in the yen has propelled corporate profitability, measured by the profit-to-sales ratio, to a five-year high. Companies are thus now in a position to pay their employees a bit more: mid-year bonuses are expected to rise by 7.4% this year, the biggest increase since 1990. Unemployment remains at a four-year low of 4.1%.

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