The Japanese stock market has been stagnant for a long time since the Nikkei 225 reached a high of 38,915 yen at the end of 1989, 35 years ago, but the rise in share prices since autumn last year has accelerated at a faster pace this year and finally reached a new high!

Market participants’ attention will now focus on whether the next major milestone of 40,000 yen can be breached, but this rise in share prices is due to the global risk-on market and bullish financial markets driven by the particularly strong US economy, and the 40,000 yen milestone in Japanese yen terms is not a milestone strong enough to attract attention, and may easily be breached and continue to rise. and may continue to rise.

That said, Japan’s CPI, core CPI and core core CPI for January came in at 2.2% (forecast 1.9%), 2.0% (forecast 1.8%) and 3.5% (forecast 3.3%) respectively, all above prior expectations, and the yen was bought back on speculation of a change in the BoJ’s policy.

The dollar/yen rate strengthened against the yen after Bank of Japan Councillor Takata said that the realisation of the 2% price stability target had become more foreseeable, and the following day, Bank of Japan Governor Ueda said at a press conference after the G20 in Brazil that the situation had not yet reached the point where it could be seen, but the rate eventually fell from a high of around ¥150.83 in New York on Friday night to ¥150.06. The Nikkei 225 futures continued to rise, despite a drop of 80 sen from the New York high of around ¥150.83 to ¥150.06 on Friday night.

US interest rates were also above 4.3% yesterday for the largest ever bid, but are currently slightly lower at 4.27%, supporting the dollar’s weakness, so the current financial environment will surely lead to a gradual step from the current financial environment to higher Japanese interest rates and lower US interest rates.

Translated with DeepL.com (free version)