Bank of Japan Set to Raise Rates Amid Economic Recovery Signs
- Japan's stock market has seen an upward movement as traders eagerly await inflation data from South Korea and Australia, along with the Bank of Japan's upcoming monetary policy meeting.
- The financial markets are closely monitoring these economic indicators for potential implications on Japan's economic policies.
- Investor sentiment remains cautious yet optimistic as they anticipate the outcomes of these significant financial events.
The Bank of Japan is anticipated to increase interest rates at its upcoming meeting on July 30, as indicated by a Reuters poll of economists. Analysts predict a 15 basis point hike alongside a reduction in the bank's bond-buying program. This decision comes in light of recent economic indicators suggesting a recovery following an unexpected contraction in the first quarter of 2024, bolstered by solid wage growth reported in May. In currency markets, the Japanese yen appreciated by 0.31% against the U.S. dollar, trading at 153.26. Meanwhile, significant developments in the automotive sector are unfolding, with a new alliance forming between Honda, Nissan, and Mitsubishi, consolidating the domestic market into two major players alongside the Toyota Motor Group. This shift is expected to reshape competition within Japan's automotive industry. On the stock market front, shares of Eisai experienced a sharp decline of 13% after the European Medicines Agency declined to approve its Alzheimer's treatment, Leqembi. This made Eisai the largest loser among the 10 stocks in the Nikkei 225 index, which otherwise saw a broad rally. In regional market performance, Hong Kong's Hang Seng index rose by 1.64%, while South Korea's Kospi and Kosdaq also posted gains. Conversely, mainland China's CSI 300 index fell by 0.54%, primarily due to weakness in real estate stocks. In the U.S., major indices closed positively, with the Dow Jones Industrial Average up 1.64%.