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Japan’s Nikkei 225 hit an intraday high of 41889.16 points, supported by financial stocks that outperformed the market. Investors rushed to buy stocks and accelerated trading until the index closed at a new high, up 0.6% to 41,831.99 points; the Topix index rose 0.47% to close at a new high of 2909.20 points.
Over the past year, the Nikkei 225 index has risen by nearly 25% from the beginning of the year to July 10, and by 5% in the past three months. This is mainly driven by pressure to buy technology-related stocks. This is the result of the rapid growth of the artificial intelligence trend in various industries. Japanese companies, including those that rely on exports, have performed strongly. This is reflected in the increase in profits caused by the depreciation of the yen.
Japan’s main stock index has hit new highs in the past two weeks. Analysts expect that the earnings reports of listed companies will be released in late July. This will be a factor that drives the Japanese stock market to rise further.
However, we still need to monitor the risk of rising global bond yields. Amid political uncertainty, Kyle Rodda, senior financial market analyst at Capital.com, expects bond yields to rise. This will make investors less risky. But at the same time, it makes borrowing more expensive to stimulate growth.
Recently (July 10, 2024), Japan released the Commercial Goods Price Index (CGPI) for June. This is an indicator that measures the prices of goods and services ordered by Japanese companies. It reflects inflation in the wholesale sector. It increased by 2.9% year-on-year.
This is in line with market expectations. This is an increase from 2.6% in May and accelerates at the fastest year-on-year rate. The index has been at 122.7 since August 2023, setting a record high for 7 consecutive months.
The increase in wholesale prices is the result of a weak yen. It puts pressure on companies to increase the cost of importing raw materials. This is a sign of increasing inflationary pressure. Let the market predict that the Bank of Japan (BOJ) may raise interest rates at its meeting on July 30-31, as the CGPI index is one of the important data for considering monetary policy.
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