Nikkei 225 Soared 3%, Japan's Producer Price Inflation Slowed In August

Akira Ito
12 Sep, 2024
Tokyo

Japan stocks rebounded and reversed losses in the previous two sessions, and investors reviewed the latest update on inflation and sentiment among large manufacturing companies. 

The Nikkei 225 stock average soared more than 3%, and the broader Topix index advanced more than 2% in Thursday's trading, and the yen edged higher to 142.73 against the U.S. dollar. 

Producer price index inflation slowed to 2.5% in August from 3.0% in the prior month, the Bank of Japan reported on Thursday. 

Producer inflation eased to the slowest pace since May after the 4% decline in petroleum and coal prices overshadowed a 2.1% increase in food and beverages and a 2.5% rise in electrical machinery. 

On a monthly basis, producer price inflation declined 0.2%, its first decline in ten months, indicating a stronger yen and a weaker price of imported petroleum products. 

Moreover, sentiment among large Japanese companies jumped 4.5% in the third quarter from a 1% decline in the second quarter, the Cabinet Office reported on Thursday. 

The index turned positive for the first time in three quarters despite the Bank of Japan raising rates and signaling possible additional rate hikes in the year. 

Market sentiment was also boosted after the crude oil prices traded around a three-year low of $66 a barrel in New York. 

Japan imports more than 99% of its crude oil from the Middle Eastern nations, including Saudi Arabia and the United Arab Emirates, and the lower cost of oil weakens domestic inflation. 

Investors are also looking forward to the release of monetary policy decisions and economic projections from the European Central Bank later today. 

 

Japan Stock Movers 

The Nikkei 225 stock average jumped 3.4% to 36,838.83, and the Topix index advanced 2.4% to 2,591.88. 

Tech stocks rebounded sharply, tracking gains in overnight trading in New York. 

Softbank jumped 7.6% to ¥8,476.0, Tokyo Electron advanced 4.5% to ¥23,220.0, Advantest Corp. soared 9% to ¥6,283.0, and Screen Holdings added 3.1% to ¥9,949.0. 

Industrial machinery and equipment makers jumped more than 5% after the sentiment among large manufacturing companies improved in the third quarter. 

Ebara soared 11% to ¥1,901.0, IHI Corp added 9.7% to ¥6,691.0, Kawasaki Heavy Industries jumped 5.6% to ¥4,572.0, and Omron gained 4.8% to ¥6,001.0. 

Retailers were in focus after producer price inflation weakened in August. 

Seven & I Holdings added 3.7% to ¥2,198.0, Isetan Mitsukoshi increased 1.2% to ¥2,170.0, Aeon Co. Ltd. gained 2.2% to ¥3,906.0, and Fast Retailing jumped 3.6% to ¥44,470.0. 

Energy importers and distributors were in focus after crude oil prices hovered near three-year lows amid expectations of lower prices in the fourth quarter. 

Eneos Holdings gained 2.3% to ¥738.10, Idemitsu Kosan increased 1.3% to ¥983.20, and Cosmo Energy advanced 3.2% to ¥7,375.0.