Nikkei’s 225 index fell last week, as investors focused their attention on the BoJ rate announcement and key Japanese earnings. The Nikkei 225 Index retreated last week to a low Y=40.800. This is down from its year-to date high of Y=42.040. The Nikkei index has been influenced by the following factors this week.
Bank of Japan Interest Rate Decision
After the BoJ’s announcement of its interest rate, Nikkei fell. The bank left interest rates at 0.50%, as expected.
Kazuo Ueda said in a press release that future interest rates will depend on a variety of factors including inflation. The recent spike in inflation was attributed to rising food prices.
As the BoJ fights against inflation, analysts expect the BoJ to raise interest rates at its October meeting. Bloomberg’s analyst stated:
The market can focus on Japan’s slowing economy, and its negative real yields. Both will have a bearing on the currency.
Earnings of the Japanese Key Employee
Other factors that will influence the Nikkei Index include the earnings of some top companies. Many firms have yet to publish their earnings, including Hitachi, Sumitomo Mitsui and Mitsubishi Electric.
Mitsubishi UFJ Financial will release its results Monday. This is a major Japanese firm worth over $157 billion. According to the results of other banks, analysts expect strong results from Mitsubishi UFJ Financial.
The BoJ’s interest rate increases have helped Japanese banks, pushing the lending base rate up to 0.50 %. Although small, this is an important shift since the Bank of Japan had been maintaining negative interest rates for many years.
Mitsubishi, a $75 billion firm, will announce its numbers on Monday. Recruit Holdings will be releasing its results on Tuesday. It is the parent company for Glassdoor, Indeed and RGF.
Mitsubishi Heavy, NTT Data Daikin Suzuki Motor and Yamaha Motor are also major Nikkei companies who will be releasing their figures on Tuesday.
In the future, more firms, such as Honda Motor, Sony Tokio, Softbank Rakuten and Japan Post, will publish their figures.
Tariffs imposed by Japan on US
On August 7, the US will begin imposing tariffs on Japanese products. According to a recent announcement, Japan has agreed that the United States will charge its products a 15% duty.
The United States also committed to investing $550 billion. These tariffs are expected to harm some of the most important Japanese automakers like Toyota and Honda, which ship thousands upon thousands of cars to the US.
Japan macro data
This week, the Nikkei will respond mildly to key events and macro-data from Japan. The Bank of Japan will, for example, publish the minutes of their last meeting on February 2. The minutes of the previous meeting will give more details about what was discussed.
On Tuesday and Wednesday, the Composite and Services PMI Report and Overtime Pay will also be important data. The latest coincident leading and economic index will be published by Japan on Thursday.
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