Japanese Exports to China Unexpectedly Plunge by 18%; Japanese Stocks Surge Nonetheless

Any other day and this news would’ve released the hounds of hell on Asian markets, as this data suggests the financial turmoil is having a rather deleterious effect on business sentiment. However, since markets are bull’d up, noses filled with cocaine, I am expecting investors will dismiss this news as yesterday’s paper and carry about their days in a most distinguishable, delirious, manner– sopping up all of the Asian shares their grubby little hands could muster.

The value of overseas shipments declined 12.9 percent in January from a year earlier, the Ministry of Finance said on Thursday, more than estimated. Imports dropped 18 percent, leaving a 645.9 billion yen ($5.7 billion) trade deficit. Exports to China, Japan’s largest trading partner, were down almost 18 percent.

Falling exports compounds poor sentiment in Japan, where wage gains have stagnated, consumer prices are barely rising and households are reluctant to spend. This year stocks have plunged and the yen has gained more than 5 percent against the dollar amid concerns over China’s slowdown and U.S. growth. This adds to worries about the seesawing nature of Japan’s economy between modest growth and contraction.

“The turmoil in global markets is making companies cautious about spending and also weakening global demand. That will be negative to Japanese exports,” Hiroaki Muto, chief economist at Tokai Tokyo Research Center in Tokyo, said before the trade report was released. “There will be no driver for Japan’s economy as domestic consumption may remain weak, and sluggish exports and production may weaken capital spending in the coming months.”

This is the worst data since the dark days of 2009. Nonetheless, Japanese stocks are going to surge tonight, already higher by 500 points or 3%.