Richard Cayne at Meyer International in Bangkok comments on the global markets;
Japan – Japan’s economy grew at the fastest pace in nearly three years in the first quarter, due to increased spending ahead of a sales tax increase on 1 April.
Official data showed GDP rose 1.5percent in the January-to-March period, against a revised 0.1percent in the prior quarter. The figure beat forecasts for 1% growth, and was led by consumer spending which rose by 2.1%.
Private consumption accounts for approximately 60percent of Japan’s economy. However, economists warned that spending may taper off now that the April tax hike has been introduced. Richard Cayne at Meyer International comments that there may be a temporary drop in spending but this is anticipated to pick up towards end of year.
“Japan’s economy expanded rapidly ahead of the sales tax hike, but is set to slump thereafter,” Marcel Thieliant, Japan economist at Capital Economics, said.
“Looking ahead, the economy will certainly contract in the second quarter of the year, as consumers rein in spending after the tax hike, and residential investment is set to plunge.”
Germany – German economic growth picked up pace in the first three months of 2014, while France’s economy failed to grow, the latest figures show.
German gross domestic product (GDP) grew by 0.8percent, driven by stronger domestic demand, the country’s statistics office said.
Richard Cayne Meyer comments that in contrast, growth in the French economy was flat, with an official figure of 0percent.
Russia – Russia’s first-quarter economic growth will likely prove to be the slowest since a 2009 recession, as the country’s standoff against the U.S. and its allies over Ukraine hampers investment, a survey of economists showed.
Gross domestic product advanced 0.7percent in January-March from a year earlier after a 2percent gain in the previous quarter, according to the median estimate of 19 economists in a Bloomberg survey. The Economy Ministry projects that output expanded 0.8 percent in the period. The U.S. and the European Union responded to President Vladimir Putin’s takeover of Crimea from Ukraine with sanctions and warned they are ready to take further measures if the former Soviet republic’s May 25 presidential election is disrupted. The $2trillion economy was stalling even before the penalties hit. The International Monetary Fund said April 30 that Russia is already in recession which isn’t much of a surprise to markets notes Richard Cayne Meyer
“The main driver for the slowdown is the contraction of investment,” Vladimir Osakovskiy, chief economist for Russia at Bank of America Corp. in Moscow, said. “Investment weakness is due to a combination of much higher borrowing costs and the deterioration of the political and economic outlook. The latter is at least partly due to rising sanction risk from the West.”
Gold – Gold sales at jewelers in Hong Kong have declined as mainland shoppers buy less, the Chinese Gold & Silver Exchange Society reported, adding to signs of a slowdown in consumption by the world’s largest user after 2013’s surge. Richard Cayne explains that this is probably temporary as Chinese love Gold though that may not keep Golds price supported at these levels and Richard Cayne believes Gold prices will drop over the next year.
Demand dropped about 30percent from a year ago, during the Golden Week break that began May 1, owing to the holiday being shorter this year and there were fewer visitors as luxury spending fell and gift-giving slowed.
While China surpassed India as the biggest user last year, the buying frenzy sparked by gold’s slump into a bear market last April hasn’t been repeated, according to Heraeus Metals Hong Kong Ltd. Lower consumption in China this year may help to extend declines in prices as investors press on with sales from exchange-traded products.
India – Indian stock markets have risen to a record high this week, after exit polls suggested the NarendraModi-led Bharatiya Janata Party (BJP) and its allies are on course to win the general election.
India’s main stock index, the Sensex, rose 1.7% to 23,941.32 points in early trade on Tuesday. This follows a 2.4% gain on Monday, ahead of the exit poll results. The markets in India have actually outperformed other Emerging Markets this year notes Richard Cayne at Meyer International in Bangkok Thailand.
Analysts said investors were hopeful that a BJP win could help reverse the slowdown in India’s economy.
Richard Cayne Meyer born in Montreal, Quebec Canada resides in Bangkok Thailand and runs the Meyer Group of Companies www.meyerjapan.com. Prior to which he was residing in Tokyo Japan for over 15 years and is currently CEO of Asia Wealth Group Holdings Ltd a London, UK Stock Exchange listed Financial Holdings Company. Richard Cayne has been involved in the wealth management space in Tokyo Japan and has assisted many High Net worth Japanese families create innovative international tax and wealth management planning solutions. https://www.isdx.com/Asia Wealth Group.