Asian markets and U.S. futures were pulled higher by investors, as Japan is preparing to adopt a new stimulus pack.
The Japanese ruling party is preparing to announce a new stimulus plan, the second attempt to save the economy by using such a measure. The new stimulus bill will cost 15.4 trillion yen, or $154 billion, more than double the size of its predecessor. Until now, it is still uncertain how this money will be spent in the economy, or which sectors will be subsidized.
The new stimulus package represents 3% of the economy, but TheLFB-Forex.com Trade Team notes that the size of the total package, including credit lines for private business and other special measures will be 3 times bigger, reaching 55 trillion yen. “With or without the new stimulus package, the economy is still heading towards a strong recession. Most likely, the stimulus bill will not reach the economy as fast as needed” TheLFB-Forex.com Trade Team added.
The Nikkei rose tonight for the first time in three days. During March, the Japanese index reached a staggering 26-year low, but since then the Nikkei has added 22%, in line with the other major indexes. When the stock market rises more than 20% investors call it a bull run.
In other news, Buffet’s Berkshire Hathaway saw its debt-rating cut lower by Moody’s. This comes after Fitch made a similar decision last month, while S&P announced that they are reviewing the company’s credit. Until now, Berkshire was among one of the few private companies that had a triple-A rating.
Overnight, the Nikkei rose 185.82 points (2.16%) to 8,780.83. The Australian S&P/Asx gained 22.50 points (0.62%) to 3,642.00.
Crude oil advanced $0.70 to $50.10 by the positive Asian equity markets.
Gold traded without a clear direction over the last few sessions. Bullion for immediate delivery fell $2.60 to $883.30.