Rising Wages and Yen Keep Stocks in Japan In Check

Akira Ito
05 Sep, 2024
Tokyo

Market sentiment in Tokyo remained negative, benchmark indexes extended weekly losses after the yen edged higher, and the latest jobs data supported the case for a rate hike. 

The Nikkei 225 stock average decreased 1%, and the broader Topix index fell 0.5%. 

Nominal wage growth in July slowed from the previous month, the Ministry of Health, Labour, and Welfare reported Thursday. 

The nominal cash wage increase slowed to 3.6% in July from a 4.5% growth in June, which was the largest since 1997. 

Wages have been rising faster than the core inflation rate of 2.7% for the second month in a row, supporting the case for the Bank of Japan to increase interest rates at the end of its policy meeting later in the month. 

Mining industry wages increased 14.8% and construction wages advanced 9.6%, but wages in information and communication fell 0.8% and transportation and postal services decreased 0.7%.

Nominal wages have been on the rise for 30th month in a row, but real wages have been on the rise only for the last three months. 

The Japanese yen edged higher to 143.17 against the U.S. dollar and extended this week's advance to 2%. 

 

Japan Stock Movers 

The Nikkei 225 stock average declined 1% to 36,678.0, and the broader Topix index fell 0.5% to 2,620.05. 

Tech stocks declined in Tokyo for the third session in a row amid persistent weakness on Wall Street. 

Tokyo Electron decreased 2.5% to ¥22,425.0, Advantest Corp. dropped 2.9% to ¥5,950.0, SoftBank Group edged up 0.6% to ¥7,835.0, and Screen Holdings fell 1% to ¥9,575.0. 

Banks were in focus after the yen gained against the U.S. dollar amid rising expectations of a rate hike later in the month. 

Mitsubishi UFJ Financial Group decreased 1.5% to ¥1,485.50, Sumitomo Mitsui declined 1% to ¥9,324.0, and Mizuho Financial Group fell 0.4% to ¥2,962.0. 

Mitsubishi Logistics gained 5.4% to ¥5,157.0, Hitachi Zosen Group gained 2.9% to ¥971.0, and GS Yuasa Corp. gained 4.2% to ¥2,870.0. 

Toray Industries and Mitsubishi Chemical Group advanced more than 3%.