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Market Commentary - Foreign Markets
Japan Nikkei falls on rate hikes woes As on : 28-May-24  15:23

Japan stock market finished session in mixed territory on Tuesday, 28 May 2024, with sentiment weighed down by concerns over rising long-term interest rates after data showed Japan's service prices at the fastest clip in over 30 years.

However, market losses capped as the Bank of Japan's key measurements of underlying inflation in April all fell below its 2% target for the first time since August 2022, stoking fresh uncertainty over the timing of rate hike. BOJ Governor Kazuo Ueda has said the central bank will raise interest rates from current near-zero levels if underlying inflation accelerates toward 2% as it currently projects. The data cast doubt on the BOJ's view that price rises are broadening beyond those driven by rising raw material costs, and likely to be sustained backed by robust domestic demand.

Traders were also monitoring a two-day symposium hosted by the Bank of Japan that features a panel discussion including senior monetary policymakers from Japan and the United States.

The 225-issue Nikkei Stock Average index was down 44.65 points, or 0.11%, to finish at 38,855.37. The broader Topix index of all First Section issues on the Tokyo Stock Exchange added 2.14 points, 0.08%, to 2,768.50.

Total 16 of 33 TSE sectors declined, with Metal Products, Pharmaceutical, Foods, Fishery, Agriculture & Forestry, Air Transportation, and Real Estate issues being notable losers, while Electric Power & Gas, Nonferrous Metals, Marine Transportation, Banks, and Mining issues were notable gainers.

ECONOMIC NEWS: The Japan?s services producer price index, a measure of the cost of a range of goods and services provided by businesses to other firms and government entities, jumped 2.8% from a year earlier, compared to the previous month's annualized 2.3%, the BOJ reported Tuesday.

CURRENCY NEWS: The Japanese yen was little changed in upper 156 level against greenback on Tuesday, with investors hesitant to buy the dollar actively amid speculation that the Bank of Japan may normalize its monetary policy sooner than expected and caution over a potential yen-buying intervention by Japanese authorities to halt the yen's slide. The dollar fetched 156.82 yen in Asian trade, as against 156.90 on Monday.

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