The worry is whether this trend can continue, it is necessary to pay attention to whether reduced demand is putting downward pressure on future output as a state of emergency has been declared in Tokyo and Osaka.

Ayako Sera

The market is reacting to what is known, the world economy is in a decent state and the U.S. economy is extremely strong, which means interest rates will continue to be raised. Investors are focusing on signs of the strength of the U.S. economy.

There was not a strong expectation for BOJ action, but there was a market reaction after the announcement, showing some were positioning for it, the BOJ could have decided to wait to see what the FOMC does this week, before taking any steps of its own.

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Japan's PMI was good, but Japanese stocks are reacting more to China's, everyone is concerned about the state of China's economy, and this reaction shows that market is very sensitive to information like this.

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The fact that it appears that something will happen for Greece is really lifting the market's mood, but these moves up are not based on fundamentals. The upside is likely to be heavy, as concerns about global growth remain.

The divergence will likely continue this year, at its earliest, it may take until the middle of next year for the economy to recover to pre-coronavirus levels.