After welcoming its new prime minister after a snap election in December, Japan is hoping it will finally hoist itself out of recession – but the nation's ongoing territorial dispute with China over uninhabited islands in the East China Sea could drag out the country's economic contraction.
Bloomberg reports that Japanese car sales are struggling to recover after a boycott instigated by China, which saw the world's number two economy favour vehicles from South Korea instead, while the US has now overtaken China as Japan's biggest automotive export market.
Trade between both powerful Asian countries has tripled since 2000 to more than $300 billion (£186 billion) and therefore there is a lot at stake for Japan, which has been struggling with a stagnating economy for years.
Indeed, the impasse has led to declines in shipments to China from Japan, with Japanese industrial output declining in November by 1.7 per cent to the lowest level since the aftermath of the earthquake and tsunami in 2011.
The Nikkei 225 closed on a strong footing today (January 8th), rising by 0.6 per cent to 10578.5 points.
Find spread betting strategies for the Nikkei 225 index at City Index.
GAIN Capital UK Limited (trading as “City Index”) is an execution-only service provider. This material, whether or not it states any opinions, is for general information purposes only and it does not take into account your personal circumstances or objectives. This material has been prepared using the thoughts and opinions of the author and these may change. However, City Index does not plan to provide further updates to any material once published and it is not under any obligation to keep this material up to date. This material is short term in nature and may only relate to facts and circumstances existing at a specific time or day. Nothing in this material is (or should be considered to be) financial, investment, legal, tax or other advice and no reliance should be placed on it.
No opinion given in this material constitutes a recommendation by City Index or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person. The material has not been prepared in accordance with legal requirements designed to promote the independence of investment research. Although City Index is not specifically prevented from dealing before providing this material, City Index does not seek to take advantage of the material prior to its dissemination. This material is not intended for distribution to, or use by, any person in any country or jurisdiction where such distribution or use would be contrary to local law or regulation.