Nikkei 225 Surges Past 41,000 as Japan Inflation Rises, Retreats Later

Japan’s Nikkei 225 reached a new high of around 41,000 on March 22, 2024, due to rising inflation in February, while other Asian markets fell. During the month of February, Japan’s headline inflation rate increased to 2.8 percent from the previous month’s 2.2 percent. Core inflation, which excludes the cost of fresh food, was 2.8 percent in May as opposed to 2 percent in June.

In its monetary policy announcement on Tuesday, the Bank of Japan stated that a sustainable and stable manner would be employed to achieve the price stability target of 2 percent.

Nikkei Pulls Back After an Erratic Trading

Nevertheless, the Nikkei pulled back around lunch to trade slightly below 41,000, closing with a 0.1 per cent gain in erratic trading. The Topix, which recently set a new record, was up 0.41 percent.

The stocks of electric vehicles caused Hong Kong’s Hang Seng index (It is a free-float-adjusted market-capitalisation-weighted stock-market index) to fall 3 percent after rising nearly 2 percent on Thursday. The value of Hang Send was at 16,720.40, whereas the Shanghai Composite index gained 0.5 percent to 3,069.67. Moreover, the CSI 300 in mainland China fell by 1.49 percent.

The shares of the Chinese EV manufacturer, Li Auto also fell 10 per cent on Friday. This occurred after the EV manufacturer lowered its first-quarter delivery estimate, causing the Hang Seng Tech index to drop 4.3 percent.

Global Stocks Mostly Positive After Fed Holds Steady

After leading gains in Asia on Thursday, South Korea’s Kospi (also known as Korea Composite Stock Price Index) dipped 0.48 percent, while the small-cap Kosdaq saw a little decline.

The Taiwan Weighted Index moved near to the flatline following its central bank’s unexpected rate hike on Thursday, while the S&P/ASX 200 fell 0.38 percent in Australia. Following the US Federal Reserve‘s rate-cutting prediction for 2024 and Thursday’s steady rate hike, all three major indexes in the country set new records overnight.

Market Cheers Fed’s Stance on Rate Cuts

The Dow Jones Industrial Average closed at 39,781.37, up 269.24 points, or 0.68 percent. After closing at 5,241.53, the S&P 500 increased 0.32 percent, and the Nasdaq Composite gained 0.20 percent to close at 16,401.84.

Jay Woods, Chief Global Strategist at Freedom Capital Markets, a New York-based investment banking and equity capital markets firm, stated that many people have faith in the Fed right now, and the rate cuts are coming soon. He also added that they are in a good mood right now. Currently, the market believes only in the peaceful landing narrative. The market continues to listen favourably to anything the Fed says.

Rising inflation caused Japan’s Nikkei to soar to a new high while the rest of Asia saw losses. Later in the day, though, the Nikkei withdrew. In contrast, US markets kept rising due to the Fed’s position on rate decreases.