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Even Bad News Can't Shake the Nikkei's Record Run

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What a week out of Japan for investors! Japan's Nikkei (NIKKEIINDICES: ^NI225  ) stock index exploded on one of its best weekly runs in recent history, roaring higher by 7.6%. The Nikkei's been one of the best indexes across the world this year, and there's no slowing it down right now as Japan pushes forward in its stimulus moves and fight against decades of stagnation.

But can the Nikkei keep its run going through the end of the year? Japanese stocks have made many investors wealthy, but analysts and economists are concerned after Japan's economy hit a snag in its most recent quarter. Let's catch up on the latest.

Is Japan's growth slowing?
Japan's GDP growth slowed down to just 0.5% in the third quarter, recording an annualized growth rate of 1.9%. That's far less than the annualized rate of 3.8% seen in the prior quarter, although as Tokyo noted, it's still far better than the contraction the country was experiencing in 2012. There's no doubt that Prime Minister Shinzo Abe's economic expansion have jump-started an economy stuck in a rut until this year.

A decline in Japan's trade balance hurt the quarter's performance. This is an area that Japan will have to capitalize on as the yen weakens: With weaker currency, exports mean that much more for companies, shareholders, and stocks. It's worked so far for formerly struggling firms such as Sony (NYSE: SNE  ) , which has seen its stock surge by more than 60% year to date despite its recent troubles in selling consumer electronics and televisions.

Fortunately, Japan's October turned out a much stronger export figure. Exports rose by more than 16% in October, the strongest mark since July and one that should help alleviate growing imports in energy and other industries that have concerned economists.

It's not concerning Sony much, however. Sony's stock exploded over the past week, roaring higher by 11.5% with both the Nikkei's rise and the launch of the company's new PlayStation 4 entertainment and gaming console exciting investors. The PS4's launch was a big moment: Sony beat rival Microsoft (NASDAQ: MSFT  ) and its competing Xbox One console to the market for next-generation gaming as the Xbox doesn't release until later this month. Additionally, Sony's $100 cheaper price point between it and Microsoft's newest console should help sway some uncertain buyers in the PS4's direction down the road.

Can Sony keep up the momentum? The PS4's a breath of fresh air for both its finances and the game industry, which has struggled through 2013 and the end of the prior generation of game consoles. With the holiday season at hand and consumers eager to get their hands on new hardware, expect both Sony and rival Microsoft to capitalize on their new launches.

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9/30/2016 2:30 AM
^NI225 $16449.84 Down -243.87 -1.46%
Nikkei 225 CAPS Rating: No stars
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Microsoft CAPS Rating: ****
SNE $32.92 Down -0.33 -0.98%
Sony CAPS Rating: ***