UPDATE: 2:56 a.m. EST — Japan’s benchmark stock index, the Nikkei 225 closed 7.16 percent higher Monday, as a retreat in the yen’s value against the U.S. dollar sent shares in the country's big exporters sharply higher. Toyota was one of the biggest gainers Monday, closing 9.56 percent higher, while Honda and Sony gained over 8 percent.
Japan stocks rose on Monday morning after their worst week in seven years, as weaker-than-expected GDP raised speculation the government would boost economic stimulus. Most Asian stock markets gained after U.S. stocks climbed on Friday.
Japan's Nikkei 225 rose 4.1 percent, South Korea's KOSPI gained 1.2 percent and Australia's ASX 200 was up 0.6 percent. Singapore's STI was little changed. Shares in Shenzhen declined as China markets reopened after a weeklong Lunar New Year holiday.
Japan's economy shrank an annualized 1.4 percent in the fourth quarter compared with the 0.8 percent median estimate of economists, according to Bloomberg. That may force the Bank of Japan to take further steps to weaken the yen to help the export-oriented economy. It already cut interest rates below zero this month, but the yen has risen because Japanese government bonds are considered a safe haven by global investors amid recent market tubulence and economic uncertainty.
“The BOJ may have little choice but to ease further if the yen continues to rise," Bloomberg reported Atsushi Takeda, an economist at Itochu Corp. in Tokyo , as saying before the report.
In the U.S. on Friday, the Dow Jones Industrial Average and Nasdaq Composite rose 2 percent and the Standard & Poor's 500 gained 1.7 percent. Oil surged on Friday amid renewed speculation oil producers would take steps to boost prices. That would be a boon to energy stocks and the many industries that supply the industry. On Sunday, Reuters reported Nigeria's oil minister said there is a growing consensus among oil producers to take action. January retail sales data also helped U.S. stocks on Friday.
“It is difficult to be sure these days given the extent of volatility present, but one of the catalysts for the better tone to financial markets on Friday appeared to have been some respectable economic data out of the U.S.,” Bloomberg reported Philip Borkin, senior economist in Auckland at ANZ Bank New Zealand Ltd., as saying.