Stocks soared in Tokyo, with the Topix index headed for its biggest gain in more than seven years, as investors weighed signs shares are oversold and a report showing Japan’s economy shrank more than expected last quarter boosted the outlook for central bank stimulus. Japan’s economy shrank 1.4 percent in the fourth quarter on an annualised basis, significantly more than economists’ forecast for a 0.8 per cent contraction.

So it’s confirmed – shares prices rely so much on government stimulus, they now react inversely to actual economic news. This can’t last…

“Japanese policy makers need to go on an all out war against the risk of a recession,” Takuji Okubo, the Tokyo-based principal and chief economist at Japan Macro Advisors, told Bloomberg TV in Tokyo.

Source: www.smh.com.au