Japan Captures Global Market and Political Attention

The future of the Asian market is on the minds of investors, with Japan taking center stage in economic news. On Friday, the consumer price inflation report for April will be released, while the G7 summit in Hiroshima has taken the attention of global markets. Investor sentiment has seen Japanese stocks soar to a 33-year high, with the Topix index and Nikkei 225 index both experiencing gains this week.

Thursday saw a 1.6% gain in the Nikkei Stock Average, the best day in two months. The World Bank economists have proclaimed “Japan is back!” after the country has faced decades of fighting deflation. However, the Bank of Japan is now dealing with high, persistent inflation while trying to stick to ultra-accommodative monetary policy. The annual core CPI is expected to jump from 3.1% to 3.4% in March, increasing the hurdles for the BOJ to remove its “yield curve control” policy anytime soon.

The broader global market, meanwhile, is feeling optimistic and bullish, with bullish moods continuing to support Wall Street, Treasury Yields, US rates, and the dollar. The market is hopeful that the Fed’s recent wave of hawkish rhetoric avoiding a US debt default.

The G7 summit in Hiroshima started on Friday, with leaders discussing China’s economic coercion in its foreign dealings. The US government has proposed narrow restrictions on investing in China, but this is not widely accepted; the G7 is divided on how to deal with China. The weekend’s G7 statement will include a “China-specific part,” according to Reuters.

Friday’s market direction will be dependent on the Japanese CPI inflation report, as well as the G7 summit happening in Japan. Additionally, investors are eagerly awaiting Fed Chair Jerome Powell’s speech.

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