Japan's Nikkei 225 index (JP225) is up 1.00% today, and the total rebound from last week's low has already reached 20%. On the other hand, the index remains almost 16% below the highs set on July 11, 2024.
The incredible volatility in the Japanese market is the result of the Bank of Japan's recent interest rate hike and investor panic related to the sharp appreciation of the JPY and "carry trade." Today, in the first part of the day, we received a series of new data for Japan, which are quite positive:
Start investing today or test a free demo
Create account Try a demo Download mobile app Download mobile app00:50 AM BST, Japan - GDP data:
- GDP (Q2): actual 3.1% y/y; forecast 2.1% y/y; previous -2.3% y/y;
- GDP (q/q) (Q2): actual 0.8%; forecast 0.6%; previous -0.6%;
- Private consumption's contribution to GDP (q/q) (Q2): actual 1.0%; forecast 0.5%; previous -0.6%;
- GDP deflator (Q2): actual 3.0% y/y; forecast 2.6% y/y; previous 3.4% y/y;
05:30 AM BST, Japan - industrial production for June:
- Industrial production: actual -4.2% m/m; forecast -3.6% m/m; previous 3.6% m/m.
Japan's economy grew much faster than expected in the second quarter (3.1% annually), rebounding after a slump at the beginning of the year due to strong consumption growth. The data is positive, with signs of a recovery in private consumption supported by an increase in real wages.
Will the BoJ hold off on further hikes?
The incoming data from Japan's economy seems to confirm the BoJ's expectations. As a result, it is possible that the Bank of Japan may decide on another interest rate hike later this year. However, the likelihood of another rate cut at the September and October meetings has significantly decreased after Prime Minister Kishida announced that he would not seek re-election and would step down next month.
The main reason for this decision is public dissatisfaction with rising living costs. For this reason, it is unlikely that the central bank will opt for an additional rate hike during this period and will be more inclined to wait until the situation in the country stabilizes, and macroeconomic data fully reflect the effects of recent rate hikes.
JP225 (D1 interval)
Japan's Nikkei 225 index (JP225) is up 1.00% today, adding to this week's dynamic rebound. The recent investor panic pushed the index down to around 30,000 points, the lowest level since mid-2023. This area already served as significant support in October and November 2023. This time, the declines were also halted there. The dynamic rebound above 36,000 points and good macro data give hope to the bulls for gains even around 38,000 points in the short term. Otherwise, the 34,000-point level, which is the nearest support zone, should be kept in mind.
Source: xStation 5
The content of this report has been created by XTB S.A., with its registered office in Warsaw, at Prosta 67, 00-838 Warsaw, Poland, (KRS number 0000217580) and supervised by Polish Supervision Authority ( No. DDM-M-4021-57-1/2005). This material is a marketing communication within the meaning of Art. 24 (3) of Directive 2014/65/EU of the European Parliament and of the Council of 15 May 2014 on markets in financial instruments and amending Directive 2002/92/EC and Directive 2011/61/EU (MiFID II). Marketing communication is not an investment recommendation or information recommending or suggesting an investment strategy within the meaning of Regulation (EU) No 596/2014 of the European Parliament and of the Council of 16 April 2014 on market abuse (market abuse regulation) and repealing Directive 2003/6/EC of the European Parliament and of the Council and Commission Directives 2003/124/EC, 2003/125/EC and 2004/72/EC and Commission Delegated Regulation (EU) 2016/958 of 9 March 2016 supplementing Regulation (EU) No 596/2014 of the European Parliament and of the Council with regard to regulatory technical standards for the technical arrangements for objective presentation of investment recommendations or other information recommending or suggesting an investment strategy and for disclosure of particular interests or indications of conflicts of interest or any other advice, including in the area of investment advisory, within the meaning of the Trading in Financial Instruments Act of 29 July 2005 (i.e. Journal of Laws 2019, item 875, as amended). The marketing communication is prepared with the highest diligence, objectivity, presents the facts known to the author on the date of preparation and is devoid of any evaluation elements. The marketing communication is prepared without considering the client’s needs, his individual financial situation and does not present any investment strategy in any way. The marketing communication does not constitute an offer of sale, offering, subscription, invitation to purchase, advertisement or promotion of any financial instruments. XTB S.A. is not liable for any client’s actions or omissions, in particular for the acquisition or disposal of financial instruments, undertaken on the basis of the information contained in this marketing communication. In the event that the marketing communication contains any information about any results regarding the financial instruments indicated therein, these do not constitute any guarantee or forecast regarding the future results.
