Japan's Core Inflation Stays Above 2% Rate for 25th Month, Nikkei 225 Extend Weekly Losses to 1%

Akira Ito
24 May, 2024
Tokyo

Market indexes in Tokyo extended weekly losses, tracking the market decline in New York in overnight trading. 

The Nikkei 225 and the Topix index fell more than 0.6% on the worry that U.S. interest rates are likely to stay higher than previously anticipated. 

Closer to home, investors overlooked the decline in inflation and core inflation, and the yen weakened to a one-week low. 

Consumer price inflation in April eased to 2.5% in April from 2.7% in March, the Ministry of Internal Affairs and Communication reported Friday. 

Inflation eased for the second month in a row after food prices advanced at a slower pace, and core inflation, which excludes food prices but does not exclude energy prices, eased to 2.2% from 2.6% in March. 

Despite the easing of inflation in recent months, consumer prices are still rising at a faster than 2% annual rate since March 2022. 

The yen weakened to 157.05 against the U.S. dollar in late afternoon trading, and the Japanese government bond yield topped 1% for the first time since May 2013. 

Bond traders have been betting that the Bank of Japan is likely to increase rates later in the year amid elevated inflation and narrow the bond yield gap with the U.S. Treasury notes. 

 

Japan Indexes and Stock Movers 

The Nikkei 225 Stock Average declined 1.3% to 38,590.19, and the Topix index dropped 0.6% to 2,738.78. 

Tech stocks dropped sharply following the weakness in New York, despite Nvidia reporting a sharp jump in revenue and earnings in its latest quarter. 

Tokyo Electron, Advantest, Screen Holdings, SoftBank, Lasrtec, and Socionext fell between 2.5% and 4.5%. 

Bank stocks were also down after the Japanese government bond yield jumped above 1% for the first time since 2013. 

Mizuho Financial, Mitsubishi UFJ, and Sumitomo Mitsui declined between 0.3% and 0.7%. 

Kawasaki Heavy Industries, Shiseido, and Fujikura gained more than 3%. 

Fuji Electric plunged 11.1% to ¥8,814.0, Yamaha Corp. fell 2.9% to ¥3,372.0, and Tokyo Tatemono fell 2.4% to ¥2,442.50.