Yen Advanced to Six-Week High After Tokyo Area Inflation Accelerated

Akira Ito
29 Nov, 2024
Tokyo

Stock market indexes in Tokyo edged lower after investors reviewed a raft of economic reports and the yen surged to a six-week high. 

The Nikkei 225 Stock Average decreased 0.4% to 38,208.03, and the broader Topix index fell 0.3%. 

For the week, the Nikkei 225 index declined 1.7%, and the Topix index decreased 1.6%, and for November, indexes declined 2.2% and 0.6%, respectively. 

The Japanese yen closed down 1.2% to 149.67 against the yen amid rising speculation that the Bank of Japan is more likely to raise rates by at least 25 basis points at the end of the two-day meeting on December 19. 

The yen jumped after the latest inflation report confirmed strong inflationary trends in place, and this is the last report before the policy meeting next week. 

Other economic data matched the expectations set by the Bank of Japan, supporting the case for the central bank to raise rates if financial markets remain stable. 

 

Consumer Price Inflation Stays Above 2%

Core consumer price index in the Tokyo metro region accelerated from a year ago to 2.2% in November from 1.8% in October, the Statistics Bureau of Japan reported Friday. 

Core consumer prices exclude only food prices, and energy prices are included in the calculations. 

The Ku-area of Tokyo in Japan is seen as a leading indicator of national price trends, and Japan's inflation data are generally released three weeks later. 

The overall inflation increased by 2.6% in the month, largely because of higher food prices, and core inflation's increase was driven largely because of the winding down of the energy subsidies. 

However, Prime Minister Ishiba is likely to reintroduce energy subsidies to low-income families, and the Cabinet is expected to approve an additional budget Friday to support economic growth and provide relief to consumers from inflation. 

 

Japan Retail Sales Extend Gains to 31st Month 

Japan's retail sales in October rose 1.6% from a year ago, marking the 31st month of increase in a row, according to the data released by the Ministry of Economy, Trade & Industry.

Automobile sales rose 7.8%, machinery and equipment sales increased 3.8%, and non-store sales advanced 4% from a year ago, respectively. 

However, food and beverage sales decreased 0.3%, and department store sales fell 3.9%. 

The state of retail sales is important for Japanese economic growth because factory production is likely to face headwinds amid possible trade confrontation with the U.S. and falling demand from China next year. 

 

Jobless Rate Edges Higher In October

Japan's jobless rate edged up to 2.5% in October from the eight-month low of 2.4% in September, a separate report from the METI showed. 

Jobs-to-application ratio increased to a six-month peak of 1.25 in October from 1.24 in September, indicating tight labor market conditions. 

The total number of employed increased by 160,000 to a seasonally adjusted 67.98 million, and the number of unemployed advanced by 30,000 to 1.71 million, the ministry said in the report. 

The non-seasonally adjusted labor force participation rate increased to 63.5% from 62.1%. 

Of the unemployed, the number of people who voluntarily left their jobs fell 5.4% to 700,000, but employees who were asked to leave, including those who retired, increased 5.4% to 390,000. 

 

Japan's Industrial Production Rebounds In October 

Japan's industrial production increased 3% from the previous month in October, accelerating from 1.6% in the previous month, the METI said in a report on Friday. 

Industrial output increased for the second month in a row and advanced at the fastest pace since July. 

Industrial output's increase was driven by the 21.7% surge in machinery production compared to a 1.7% decrease; motor vehicle production rose 6.4% from 7.1%, and fabricated metals production jumped 8.1% compared to a 0.2% decrease in the previous month, respectively. 

On an annual basis, industrial production increased 1.6%, reversing a 2.6% fall in September and the first increase in three months. 

 

Japan Stock Movers 

Banks, retailers, and tech stocks were in focus after the yen surged in Friday's trading. 

Mitsubishi UFJ Financial increased 1.3% to ¥1,792.0, Sumitomo Mitsui Financial advanced 1.1% to ¥3,686.0, and Mizuho Financial gained 1.6% to ¥3,784.0. 

Seven & I decreased 0.7% to ¥2,604.0, Fast Retailing edged up 0.02% to ¥51,110.0, and Isetan Mitsukoshi declined 1.9% to ¥2,130.50. 

Advantest Corp. gained 0.4% to ¥8,240.0, Tokyo Electron decreased 1.8% to ¥23,310.0, and Lasertec fell 0.9% to ¥16,440.0.