Japan Stocks Closed Down After Elevated Inflation Supported Rate-Hike Case

Akira Ito
30 May, 2025
Tokyo

Stock market indexes in Tokyo declined and reversed the previous session's gains after core inflation in the Tokyo region accelerated. 

Moreover, the temporary approval of global tariffs by a U.S. appeals court, ahead of a permanent ruling in three weeks, shook investor sentiment and prolonged market uncertainty.

 

Japan's Overall Inflation Stayed Elevated In May

Core inflation in the Tokyo region accelerated to a two-year high amid broad price increases, the Statistics Bureau of Japan reported Friday. 

Core inflation, which excludes fresh food, in the Ku area of Tokyo advanced to 3.6% in May from 3.5% in April. 

Core inflation has risen sharply from a low of 2.2% in February to 3.6% in May, and fresh food prices eased 0.3% from a surge of 23.1% in January because of stabilization in rice prices.  

Overall inflation stayed unchanged at 3.4% in May, but inflationary pressures are building up in housing, transportation, entertainment, and communication.  

The government is expected to reinstate utility subsidies from August, which could lower prices for electricity. 

 

Japan's Retail Sales Growth Accelerated In April

Japan's retail sales growth accelerated to 3.2% in April, faster than 3.1% in the previous month, according to the Ministry of Economy, Trade & Industry. 

Retail sales rose for the 37th consecutive month and advanced at the fastest pace since January, amid a rise in demand for automobiles offset by a decline  in sales at department stores.  

The multi-year high wage increases for three years in a row continue to drive higher retail sales. 

 

Annual Industrial Output Advanced 3rd Consecutive Month In April 

Industrial output decreased in April from the previous month amid uncertainties about exports. 

Output declined 0.9% from the previous month, reversing a 0.2% increase in March, weighed down by the fall in demand for production machinery by 8.7% compared to an increase of 7.1% and transportation equipment, excluding motor vehicles, by 7.0% compared to a rise of 6.6% in the previous month. 

On an annual basis, industrial output advanced 0.7% in April, easing from a 1% increase in March and advancing for the third consecutive month.  

 

Japan Indexes and Stocks 

The Nikkei 225 Stock Average dropped 1.3% to 37,932.45, and the broader Topix index declined 0.5% to 2,798.55. 

For the week, the broader Topix advanced 2% and gained about 5% in May.

The Nikkei 225 Stock Average gained 1.6% in the week and advanced 5.3% in May. 

Tech stocks led decliners amid uncertainty about the U.S. trade policy and rules. 

Tokyo Electron declined 4% to ¥23,165.0, Advantest Corp. fell 4.1% to ¥7,330.0, and Disco Corp. decreased 5.4% to ¥32,940.0. 

Sony Group decreased 2.1% to ¥3,886.0, Nintendo Co. Ltd. declined 2.3% to ¥12,055.0, and Fast Retailing Co. Ltd. fell 1.3% to ¥48,040.0.