Tokyo Markets

THE NIKKEI ROSE ON THE FIRST FULL DAY OF THE NEW GOVERNMENT IN OFFICE.

But looks like Tokyo took cues from overseas markets, and didn't necessarily reflect domestic political sentiment.

Nikkei ended the day up third day in a row 10,443 (up 1.6%)
Topix ended up for the first time in 4 days 939 (up 0.8%)
Gains were somewhat modest, though, contrary to most other major markets.

The Dow and the S&P rose to fresh 11-month highs, pushed higher by the release of positive Industrial Output and Housing Starts data which came on the heels of better-than-expected Retails Sales figures.

It was the third day in a row NY rallied.
In fact, the rest of the world has seen new highs all week (Europe & Asia pretty much across the board.)

WHY, THEN, ARE WE ONLY SEEING *MODEST* GAINS IN TOKYO??

One of the strongest factors has been (i.e. continues to be) the stronger yen.
This is a big deal because Japan is a major export-dependent country, ie exporter-related company products are affected by currency fluctuations.
Currently the currency (hahaha) is trading in the upper 90's (90.80~90.99) to the dollar. This is a big difference from the 94 and 95 range that most exporters calculate earnings reports by. Imagine dealing with billions and billions of 3-4 yen discrepancies!!!

There is also political skepticism. Like:
How will the new government (Democratic Party of Japan, PM: Hatoyama) implement its handful of new reforms?? How they will revise the stimulus package?? Most investors will give the government a 100-day (or 3-month) "honeymoon" period, so this will continue to be an ongoing concern.
And the new Finance Minister, Hirohisa Fujii, said that a currency intervention is not necessary at this time. Even though the yen is crazy strong. So Investors are thinking: Hmmm...

Going hand-in-hand with these worries is the fact that Financials was one of the worst performing sectors today.

BANK OF JAPAN
It didn’t come as much of a surprise that the Bank of Japan kept their overnight interest rates on hold at 0.1%, but they did upgrade their economic assessment saying that they are seeing “signs of recovery.”　That's the first time they've revised their assessment upwards since July.

The focus is now on whether or not the BOJ will continue its special aid designed to assist companies during this financial crisis (i.e. outright buying of commercial paper). Currently the deadline is set for the end of the calendar year.

That's it!

I ♥ MONEY.