Market has failed to make headway despite strong earnings momentum

JAPAN

The Japanese market has risen modestly in recent weeks and the 1% move in the broader Topix Index during July was disappointing given the broad rally seen in developed markets.

The results season in Japan has been encouraging for investors and there were significant surprises in Japanese earnings, particularly in the export/technology sectors. However, the macro concerns regarding the sustainability of the US economic recovery remained a headwind to a more meaningful increase in risk appetite. Japan’s underperformance during July was predominantly caused by the ongoing strength of the yen and the short-term deterioration in supply/demand conditions, due to large secondary issues from Mizuho and Inpex. The political outlook has become clouded post the resu...