Economic growth, which was weaker than had been expected in Japan, weighed on the market to start the week, on what for many will be a light day for the economical calendar worldwide.
The biggest economic indicator for the day was the 2.6% second-quarter annualized rate of growth that was recorded for Japan, the third biggest economy in the world.
The number was far below the 3.8% that the country recorded during the first three months of the year, and the 3.6% that analysts predicted. This in turn helped to dent worldwide sentiment Monday morning.
The Nikkei index fell back after the news was released to end 0.7% lower for the day, while the yen dropped as well, with the dollar increasing by 0.5% to 96.80 yen.
Growth that is slower could make it more difficult for Shinzo Abe, Japan’s Prime Minister to carry out the plans he has of raising sales tax in April by 3%. At this time, the tax is 5%.
One analyst said that the key to fiscal consolidation over the long term in Japan was increasing the consumption tax. He said if the Prime Minister does not increase the tax as has been planned, it would risk undermining the confidence of foreign investment in the country.
Following the news from Japan, stocks in both Europe and the U.S. saw their futures drift lower amidst a lack of real economic data.
Futures on Wall Street were pointed lower by 0.4% to open, while the S&P futures showed a drop of only 0.5% to open.
Last week, stocks in the U.S. suffered their worst five straight sessions since June amidst worries over when the monetary stimulus program will start being reduced in the country.
