Foreign Markets

Japan stock market finished session lower on Friday, 22 September 2023, on tracking overnight declines on Wall Street. Meanwhile, selloff pressure mounted as investors digested the Bank of Japan's decision to keep its super-easy monetary policy and a private survey showed Japan's manufacturing activity fell back into contraction in June and service sector growth slowed for the first time in seven months.

The 225-issue Nikkei Stock Average index declined 168.62 points, or 0.52%, to finish at 32,402.41. The broader Topix index of all First Section issues on the Tokyo Stock Exchange fell 7.14 points, or 0.3%, to 2,376.27.

Shares of Nippon Television Network soared 13.5% after saying that Studio Ghibli, the famed Japanese animation studio of Hayao Miyazaki, will become its subsidiary.

ECONOMIC NEWS: BOJ Keeps Monetary Policy Unchanged, Says It Will Patiently Continue With Monetary Easing - The Bank of Japan maintained its ultra-loose monetary policy unchanged today. The board of the BoJ decided to retain a negative interest rate of 0.1% on current accounts that financial institutions maintain at the central bank. The bank also voted to keep the cap on the 10-year Japanese government bonds yield at around zero%. The central bank noted that with extremely high uncertainties surrounding economies and financial markets at home and abroad, the Bank will patiently continue with monetary easing while nimbly responding to developments in economic activity and prices as well as financial conditions.

Japan Core Inflation Steadies At 3.1% In August- Japanese national core consumer price index inflation, which excludes volatile fresh food prices, rose 3.1% in August, data from the Statistics Bureau showed on Friday. The reading was above forecasts of 3%, and remained steady from the prior month's reading of 3.1%. Energy dragged more on prices while hotel fees boosted them, with gains in processed food costs continuing to be the biggest factor behind inflation. Including fresh food prices, national CPI inflation grew 3.2% in August, compared to a 3.3% rise in July.

Japan Composite PMI Signals Softer Expansion In Private Sector- The headline au Jibun Bank Flash Japan Manufacturing Purchasing Managers' Index (PMI) decreased from 49.6 in August to 48.6 in September, signaling a fourth consecutive deterioration in operating conditions that was the strongest since February. There were sustained decreases in both output and new orders, with the latter falling at the sharpest rate in seven months.

In line with the trend for new orders, the rate of backlog depletion also quickened on the month to reach the joint-sharpest since March. Price pressures faced by Japanese manufacturers remained elevated during September, as the rate of input price inflation accelerated for the second successive month to hit a four-month high. That said, output charges were increased at an unchanged, albeit solid pace in the latest survey period.

At 53.3 in September, the au Jibun Bank Flash Japan Services Business Activity Index fell from 54.3 in August to signal a softer, yet still moderate increase in business activity that was the slowest since the start of the year. Growth in new business also eased from that seen in August while foreign demand for Japanese services fell for the first time in 13 months.

Service providers also noted a reduction in employment levels for the second time in the past three months at the end of the third quarter, with the rate of job shedding the strongest seen since January 2022. Firms remained optimistic regarding the outlook for output over the coming 12 months during September, however the overall degree of optimism eased to the softest since March 2022.

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