Nikkei and Topix Trimmed Weekly Gains, Japan's Household Spending Unexpectedly Declined In May

Akira Ito
05 Jul, 2024
Tokyo

Benchmark indexes in Tokyo traded down and trimmed weekly gains after rallying in five sessions in a row. 

The Nikkei 225 and the Topix fell ahead of the U.S. jobs report later in the day, and the yen slightly rebounded from its 38-year low to 160.62 against the U.S. dollar. 

Japan's household spending unexpectedly declined in May by 1.8% to 290,328 yen, the internal affairs ministry reported Friday. 

Household spending fell after rising 0.5% in the previous month and declined in 13 of the last 14 months. 

Spending on food fell 3.1% as purchases of vegetables and seaweed fell after poor crops pushed prices higher. 

Spending on housing declined by 3.5%, reversing the gain of 3.5% in the earlier month, but medical care spending accelerated to 6.4% from 1.2% in the previous month. 

The resumption of the decline in household spending dashed hopes for the Bank of Japan's policymakers to start the spiral of higher spending and wages, supporting the upward momentum. 

In international trading, the pound and the euro traded lower as investors worried that new governments in France and the U.K. are likely to step up government spending amid record-high national debts. 

The UK's Prime Minister, Rishi Sunak, conceded defeat after the Labour Party won 410 seats in the House of Commons, with 650 seats. 

The sharp reversal in voter sentiment came about after a series of recent policy missteps over immigration, healthcare funding, and lack of infrastructure spending during the Conservative government of 14 years. 

In France, the far-right National Rally Party is struggling to win an absolute majority in the second round of the election scheduled for July 7, after President Emmanuel Macron's party formed a coalition with the newly formed Popular Front. 

Financial markets in New York are set to reopen lower after the Independence Day holiday on July 4. 

 

Japan Stock Movers 

The Nikkei 225 stock average declined 0.2% to 40,828.58, and the Topix index fell 0.6% to 2,881.62. 

For the week, the two benchmark indexes are set to close up 3%. 

Tech stocks were among the leading decliners, and Tokyo Electron, Screen Holdings, Advantest, and SoftBank declined between 1% and 1.5%. 

Retailers were in focus again in the hopes of higher earnings, driven by a surge in foreign tourists. 

Isetan Mitsukoshi gained ¥3,528.0, Seven & I edged down 0.1% to ¥1,993.50, Mercari gained 4.0% to ¥2,407.50, and Takashimaya added 0.8% to ¥2,953.50. 

Nippon Yusen declined 3.5% to ¥4,923.0, Mitsui OSK fell 3.4% to ¥5,111.0, and Kawasaki Kisen dropped 2.5% to ¥2,700.50.