18653826 – dense buildings in minato-ku, tokyo japan with tokyo sky tree visible on the horizon.

Asia Pacific stocks inched higher on Thursday morning. Japan’s Nikkei 225 edged above 0.36% ahead of US CPI data to be released on Thursday. Australia’s ASX 200 was up by 0.50% as tech stocks in the country surged. Hong Kong’s Hang Seng index rose by more than 0.30%.

Japan’s Economic Outlook

The Nikkei 225 index reacted to Japan’s strong Producer Price index data released on Thursday. According to Japan’s Ministry of Finance, Japan Producer Price Index (PPI) in May rose by 0.7% MoM from the previous 0.9% in April. This was stronger than the estimated forecast of 0.5%.

Japan’s Producer Price Index (PPI) rose to 4.9% YoY from the previous 3.8% in April. It surpassed the estimated forecast of 4.5%. However, Japan’s Foreign Investments in Japanese stocks dropped in to ¥94.5 billion from the previous ¥181.4 billion.

Japan’s wholesale prices in May shot up to its highest level since September 2008. The wholesale prices were boosted by an increase in commodity prices. Since wholesale prices affect consumer prices, economists are carefully watching whether rising raw materials prices will influence consumer prices.

Petroleum and coal products were the biggest contributors in the rise of wholesale prices in May. Crude oil as well as other commodities recorded gains in May. Nonferrous metal prices jumped to 41.6% as scrap pieces surged to 91.6%.

However, some commodities declined in May. City gas, water bills and electricity slipped by 3.9%.

The Bank of Japan is yet to hold its policy meeting next week. Some economists are expecting the BOJ to keep its negative interest rate and asset purchases settings in place. Analysts also expect the BOJ to prolong the Corona virus measures as Japan’s economy struggles to recover.

However, with escalating Covid-19 vaccinations, there is still hope for global economic recovery, but the pandemic impacts will linger. Japan’s economy is expected to contract in the April-June quarter as domestic demand rises steadily.

The Nikkei 225 index will react to US CPI data to be released on Thursday. Economic investors predict a rise in the CPI. The Federal Reserve is also expected to taper its massive stimulus as inflation surges.

Nikkei 225 Movers

Some of the top performers in the Nikkei 225 index include Nippon Yusen K.K, Sumitomo Dainippon Pharma Ltd and Isuzu Motors. Nippon Yusen, a shipping company, rose by 3.65% after a rise in commodity prices in Japan. Sumitomo and Isuzu motors jumped by 3.49% and 2.20% respectively after strong producer prices.

Among the worst performers in the index include Eisai, NH Foods, and Citizen Holdings. The companies recorded a decline of 7.02%, 3.54% and 2.44% respectively in their stock prices.

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