Japan’s Economy Shows Signs of Life as Spending Revives

TOKYO—The Japanese economy returned to growth in the April-June quarter thanks to a recovery in spending by households and companies.

Japan’s gross domestic product expanded 0.8% in the three months to June from the previous quarter, preliminary government data showed Thursday. That compared with economists’ forecast for 0.6% growth in a poll by data provider Quick. The economy contracted 0.6% in the January-March quarter.

The figures come after the Bank of Japan opted to raise interest rates last month and signaled potential for further increases, stoking concern among some that the economy wasn’t yet strong enough to stomach the move, as a premature increase could dial back inflation too far and lead to a slowdown.

The economy grew 3.1% on an annualized basis, which reflects what would happen if the second-quarter pace continued for a full year.

Private consumption rose 1% from the previous quarter, snapping four consecutive quarters of declines. Car sales recovered, shrugging off the impact of production suspensions that had crimped output earlier in the year.

The rising cost of living and a struggling economy have led to a decline in Prime Minister Fumio Kishida’s voter support. Kishida had introduced measures to protect households from inflation and revive consumption, including tax cuts and energy subsidies. But they didn’t help his approval ratings recover much, and Kishida said Wednesday that he won’t seek to stay in office.

Economists expect consumption to recover further in the July-September period thanks to the effects of the income and residential tax cuts. Real wages adjusted for inflation also turned positive in June for the first time in more than two years.

Thursday’s data showed capital expenditures also rose 0.9% on the back of solid corporate earnings.

One print showing some improvement may not be enough to convince analysts that the economy is getting back on track, however.

It will be difficult to say that the economy has emerged from its seesawing phase, NLI Research Institute economist Taro Saito said before Thursday’s data release. In order to confirm the recovery of the Japanese economy, it will be necessary to examine developments in the July-September quarter and thereafter, he said.

Economists at Moody’s Analytics meanwhile said in a recent note that even a robust increase in Thursday’s data would follow a series of lackluster gross domestic product reports that have captured falling output for the better part of a year.

Gold is one of the market’s go-to hedges in rocky times. Don’t forget that gold miners’ stocks are too.

The stock market’s gains in 2026 belie the rocky macroeconomic picture: elevated inflation, heightened geopolitical tensions, and jitters about the artificial-intelligence trade. That backdrop, in theory, should be the time for gold to shine. Instead, the price of the yellow metal has tumbled more than 5% so far, after last year’s blistering 65% rally. In part, the U.S. dollar’s recovery has stymied gold, which benefited from the greenback’s weakness in 2025.

Even with the precious metal’s recent weakness, gold mining stocks could be the best way to profit from this year’s uncertainty.

Gold miners “are a valuable hedge against macro risks that would likely be damaging for equities,” BCA Research’s Noah Weisberger and Rishabh Shah wrote this week.

Concerns about the Federal Reserve’s next moves to tackle inflation, the increasingly crowded AI trade, and steep valuations for tech stocks are just some of the drivers that could help gold’s price get on even footing— and lead to even bigger gains for miner stocks.

These stocks’ prices tend to outpace gold’s moves, because the companies have fixed operational costs. So when gold’s price rallies, their profit margins soar, and vice versa. For instance, the VanEck Gold Miners GDX +7.39% exchange-traded fund has fallen 11% this year as the metal has slumped.

Now, gold’s price just needs to stabilize to help miners’ stocks take off, and that seems to be happening. The precious metal has recently found support above the $4,000 level, and has stuck in a narrow range since the end of June. But its price rose ever so slightly in July, ending a four-month losing streak for the metal. Technical analysis also suggests that gold is due for a comeback.

Barron’s recently wrote that the pullbacks for both gold miners and the metal itself are overdone. Senior technical analyst Doug Busch noted that the VanEck ETF is on the “verge of a breakout” and has the potential to hit $11o in early 2027, up more than 40% from its current price.

Gold miners also have more than their role as a market hedge going for them. Their fundamentals are solid, too, says Chris Mancini, portfolio co-manager of the Gabelli Gold Fund.

“Precious metals miners are generating substantial amounts of free cash flow given profit margins of over $2,000 per ounce, and are returning this cash to shareholders through buybacks and dividends,” he said in an email.

“Buying the miners is a cheap way to get exposure to the price of gold,” he added. His fund owns Newmont NEM +6.71%, a Barron’s stock pick last year, and Agnico Eagle Mines as top holdings, as well as miners Northern Star Resources, Endeavour Mining, and Kinross Gold K+8.59%.

Miners are better businesses than they used to be, the BCA team added.

“Capex is more disciplined, margins are high and rising…and they are largely independent of the AI story,” Weisberger, BCA’s head of equities, and Shah, a senior analyst, wrote.

That last part is key. AI is disrupting the software industry and many other services and information-oriented businesses, and investors have piled into AI stocks. But ChatGPT, Claude, Grok, and other large-language models aren’t going to replace the need to mine for metals.

“Equity portfolios can benefit from exposure to quality that is uncorrelated to AI risk, and gold miners fit the bill,” the BCA team said.

They recommend that investors buy the VanEck Gold Miners ETF, which owns top miners such as Agnico, Barrick Mining ABX +7.24%, and Newmont.

An important bonus for big gold miners’ stocks is that their valuations are attractive after the gold’s pullback, too. The VanEck ETF is now trading at just a little more than nine times next year’s earnings estimates. That’s a big discount to its five-year average price-to-earnings ratio of 14, according to FactSet.

What’s more, the ETF is currently valued at a more than 50% discount to the S&P 500 SPX -0.17%, which is trading for about 19 times earnings estimates for 2027. Mining stocks have typically traded at just a 25% discount to the broader market over the past five years. So there is significant upside for the group if valuations move back toward normal levels.

One factor that complicates mining stocks as a market hedge, of course, is if stocks bounce back, which has been the case so far in August.

But both the market and economic outlooks remain cloudy, and investors remain nervous about the Fed’s next moves and AI stocks. Gold miners should do just fine, even if the anxious mood on Wall Street persists.

Japan’s Economy Shows Signs of Life as Spending Revives

Gross domestic product expanded 0.8% in the three months to June from the previous quarter, preliminary government data showed