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Japan growth beats expectations as markets tread carefully

Japan’s economy grew faster than the market expected in the first quarter, but the stronger data failed to lift regional sentiment on Tuesday as investors remained focused on elevated energy prices and lingering uncertainty over the Middle East. US stocks closed mixed on Monday, with news of a delay to a planned US strike on Iran offering only temporary support, while Asian equities traded without a clear direction on Tuesday. Oil prices eased slightly, but remained elevated,  while the US dollar firmed a bit and gold prices were slightly lower, trading around USD 4540 per ounce. US Treasury yields retreated only slightly from high levels, with the 2-year yield around 4.1% and the 10-year yield at 4.6%.

  • Date
  • Auteur Shane Strowmatt, Senior Investment Writer
  • Temps de lecture 5 minutes

Tokyo Japan

Japan’s economy expanded at an annualised rate of 2.1% in the first quarter, up from 1.3% in the previous quarter and faster than economists had expected, according to data released on Tuesday. Gross domestic product grew 0.5% from the previous quarter, compared with 0.3% at the end of 2025, while year-on-year growth stood at 0.6%, supported by stronger consumption and robust exports. March exports rose 11.5% from a year earlier, helped in part by a 29.3% increase in semiconductor equipment shipments, although higher energy costs linked to the Iran war are likely to weigh on consumption and investment ahead. The Bank of Japan said earlier this month that growth is expected to slow this year, cutting its fiscal 2026 forecast to 0.5% from 1% while raising its core inflation outlook to 2.8% from 1.9%. Japan’s Nikkei 225 was down 0.4% on Tuesday.

Asia markets mixed as oil eases

Other Asia-Pacific markets traded mixed on Tuesday as well, as oil prices retreated slightly after US President Donald Trump said he was delaying a planned strike on Iran, although energy prices remained elevated amid continuing disruption in the Middle East. Brent crude fell 1.2% to USD 110 a barrel and West Texas Intermediate dropped 1.2% to USD 103, after concerns over the conflict had driven prices sharply higher. South Korea’s Kospi fell 2.6%, while Australia’s S&P/ASX 200 rose 1% and Hong Kong’s Hang Seng gained 0.1%.

US stocks end mixed

US stocks closed without a clear direction on Monday as news that a planned strike on Iran had been delayed provided only temporary support. The Dow Jones Industrial Average rose 0.3% to 49,686.12 points, while the S&P 500 slipped 0.1% to 7403.05 points and the Nasdaq 100 fell 0.5% to 28,994.37 points, after the latter two had reached record highs on Thursday.

Swiss growth picks up

Switzerland’s economy grew by 0.5% in the first quarter, up from 0.2% in the previous quarter, according to a flash estimate released on Monday. The expansion was driven by gains in both industry and services, with exports also benefiting from lower US tariffs at the start of the year. The reading was stronger than Switzerland’s average quarterly growth rate of 0.4%, although officials warned that higher energy prices linked to the Middle East conflict could weigh more heavily on activity in the coming months. Switzerland’s Swiss Market Index rose 0.2% on Monday, lagging gains in other European markets. The Euro Stoxx 50 gained 0.6%, while Germany’s DAX climbed 1.5% and France’s CAC 40 added 0.4%.

Corporate and economic calendar

Corporate news in focus: Quarterly figures from Home Depot.

Economic data in focus: UK unemployment rate (08:00), EU trade balance (11:00), Canadian Consumer Price Index (14:30).

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Editor: Alessandro Fezzi
Source: LGT Bank (Switzerland) Ltd.