On May 19, Reuters reported on the state of the Asian market. Japan was in the spotlight, with April’s consumer price inflation report being heavily discussed, as well as the G7 summit taking place in Hiroshima. Japan’s stocks hit a 33-year high due to an improvement in investor sentiment. Both the broad Topix index and the Nikkei 225 index rose, with the Nikkei Stock Average rising by 1.6% on Thursday, its best day in two months. This week, it is up 4% and on track for its best week since October. World Bank economists celebrated Japan’s growth, saying, “Japan is back!”
However, Japan is facing the issue of persistently high inflation after years of battling deflation. The Bank of Japan is reluctant to remove its ultra-accommodative monetary policy, meaning that the annual core CPI is expected to rise to 3.4% from 3.1% in March. Investors are feeling optimistic about the market, particularly in light of the G7 summit, which will discuss China’s use of “economic coercion” when doing business abroad. The summit will include a “China-specific part” in its main statement. Market directions for Friday include Japanese CPI inflation (April), the G7 summit (Japan), and Fed Chairman Jerome Powell speaking.