Japan’s Nikkei 225 index was on a standstill after the country edged towards inflation for the first time since March last year. Australia’s ASX 200 index as well as Hong Kong’s Hang Seng index edged higher. Mainland Chinese stocks, the Shanghai Composite and the Shenzhen Component declined.

Japan’s Economic Outlook

The positive National Consumer Prices index (CPI) for May boosted the Nikkei 225 index. According to Japan’s Bureau of Statistics, National Core CPI for May hit its estimated forecast of 0.1% YoY. The National CPI jumped 0.3% MoM from the previous 0.4% decline.

Japan’s inflation has started heading towards positivity. This is the first time in 14 months for a rise in the country’s inflation. The inflation has been boosted by a rise in commodity prices. Consumer prices excluding fresh food rose 0.1%.

The prices were boosted by a 20% jump in gas prices. According to the Bank of Japan (BOJ), the country’s inflation will likely stay below 2% in the foreseeable future.

The BOJ released its monetary policy statement on Friday. According to the statement, the bank will apply a negative interest rate of 0.1% on Policy Rate Balances in accounts held by financial institutions. The 10-year Japan Government Bond yields will remain at zero per cent.

According to the BOJ, exports and imports have continued to gradually rise with economic recoveries in other nations. Corporate profits and business sentiment have also improved. Despite a slowdown in some industries, business fixed investment has been on an uptrend.

However, employment and income earnings declined due to the pandemic effects. Private consumption remained on a standstill due to a decline in consumption services such as pubs and restaurants. Housing and public investment started gaining momentum.

The CPI for all items less fresh food is expected to remain at 0% in the short run after which it will gradually increase. economists expect the consumer price index excluding the impact of cheap mobile fees, to rise 0.5% or 0.6%.

Nikkei 225 Movers

Eisai was the best performer in the Nikkei 225 index. The pharmaceutical company gained 5.96% in its stock earnings after a rise in Japan’s inflation. SUMCO Corp and Konami Corp gained 3.20% and 2.93% respectively. CyberAgent Inc rose by 2.41% after the BOJ monetary statement.

Nippon Yusen K.K led the laggards in the index. The shipping company declined by 6.98% despite positive exports and imports data by the BOJ. Kawasaki Kisen Kaisha dropped by 5.79%. Mitsui O.S.K. Lines followed suit by a 5.26% fall.

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