While many investors are still digesting the weaker-than-expected US Payrolls release at 130,000, markets are now opening in Asia and are trading firm. The Nikkei 225 is now trading higher by 0.4%. China exports to the US for July fell by an unexpected 1 percent while analysts predicted a 2 percent rise. With the economy slowing, the People’s Bank of China has added stimulus, saying on Friday that it will reduce its reserve ration (supporting the economy, with stimulus) by 50 bps, and to some banks by 100 bps.
It has become transparently obvious that both the US and China, while waging a trade war that will negatively impact their respective economies, are adding monetary and fiscal stimulus to support their slowing economies. The Nikkei 225 is trading firm, up 0.4% and USDJPY is currently trading 106.96 adding support to equity markets. The Japan GDP report puts growth at 1.3% annually – still positive for the Japanese economy and stocks. We still like Toyota, TDK, Sony, and other names that we listed recently including small caps.