The current bull market that has seen the end of Japan’s lost three decades should be named the “end of deflation” market, according to JPMorgan’s top Japan strategist.
Inflation Insights
Inflation data out of Japan once again showed its strength, with core CPI sliding to 2% from 2.3% but exceeding estimates of 1.8%.
Yield Movement
The yield on the 2-year Japanese government bond BX:TMBMKJP-02Y reached 0.176%, marking its highest level since 2011.
Market Performance
The Nikkei 225 JP:NIK ended virtually unchanged at 39,239, displaying a 43% increase over the past 52 weeks. Meanwhile, the Japanese yen rose by 0.3% to 150.22 per U.S. dollar.
Roadmap to Sustainability
JPMorgan’s Nishihara highlighted the end of deflation as a critical milestone, emphasizing the significance of core CPI reaching 2% for the first time in April 2022. Share prices found their bottom in January 2023 following the Bank of Japan’s unexpected revision of its yield curve control policy.
Future Projections
Nishihara outlined a roadmap towards a sustainable level of 40,000 on the Nikkei 225, with attention shifting to the Topix JP:180460 index. To surpass its bubble high of 2,884.80 from December 1989, share price gains must extend beyond semiconductor stocks, as stated by Nishihara.
Closing Numbers
The Topix concluded the day at 2,678.46, registering a modest increase of 0.2%.
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