The year-end rally in Asian markets continues, with the MSCI Asia Pacific regional index ringing in another increase, taking its year-to-date climb to 13%. The best performance is that of Japan, where the Nikkei gained another 2% reaching over 10 thousand for the first time since last April. Since November 14, when the elections that would have brought the Liberal Democratic Party back to power were announced, the Nikkei has risen by 16%: monetary policy will become more accommodative and will flood Japan with liquidity - the markets think - to the point of forcing inflation towards 2-3%, erasing the 'minus sign' of deflation which is weakening the economy.
Other factors also contributed. Standard & Poor's has upgraded Greece's rating after the latest debt restructuring agreement, while the agreement on the 'fiscal cliff' is approaching in the US. The euro strengthens and the yen weakens, while gold, after the slide, remains at the level of 1675 $/ounce.
