Japan's Inflation Acceleration Lifts Yields, China's Home Price Decline Extended In December

Arjun Pandit
16 Jan, 2023
Mumbai

Tokyo stocks were under pressure after wholesale prices accelerated in December and investors awaited the rate increase on Wednesday from the Bank of Japan after the two-day meeting.  

Wholesale prices accelerated in Japan in December, the Bank of Japan reported today. 

The Corporate Goods Price Index increased 10.2% in December after rising at a revised annual pace of 9.7% in November. 

While the import price index eased to 22.8% in December from 28.0% in November, domestic good prices are still rising at elevated levels.   

In 2022, wholesale prices rose at a faster pace of 9.7% after rising at 4.6% in November, the fastest pace since record keeping began in 1981. 

After the release of the inflation data, the yield on 10-year Japanese government bonds increased to 0.52%, the highest level since 2015. 

The Nikkei index declined 1.1% to 25,822.32 and the yen traded up to 128 level against the U.S. dollar, the strongest level in seven months on the rising government bond yields. 

Housing market weakness persisted for the sixteenth month in a row in December, the National Bureau of Statistics reported Monday. 

New home prices eased 0.25% in December and existing home prices declined 0.5% 

Of the 70 urban markets tracked by the government agency, the number of cities reporting new home price decline increased to 55 in December from 51 and existing home price decline increased to 63 cities from 62 in November.   

China's reopening is expected to increase transaction volume and improve market confidence and the announced government measures are also likely to support completions of unfinished projects.  

The Shanghai Composite index increased 1.0% to 3,227.59 and the Hang Seng index added 8.06 points to 21,746.72. 

The Sensex index fell 0.3% to 60,092.97 after wholesale inflation dropped to the lowest level since February 2021. 

Wholesale inflation eased to 4.95% from a year ago in Dec from 5.85% in Nov, the lowest level since February 2021. 

On a monthly basis contraction deepened to 1.1% from 0.5% in the previous month.

The Indian rupee held steady at 81.62 against the U.S. dollar.