Cyber Monday Deal: Up to 60% off InvestingProCLAIM SALE

ING predicts Japan PMI rise on wage talks, IT and auto demand

EditorAhmed Abdulazez Abdulkadir
Published 19/04/2024, 12:32 am
N225
-

On Thursday, ING analysts forecasted an increase in Japan's upcoming Purchasing Managers' Index (PMI) numbers, attributing the anticipated rise to robust wage negotiations and steady demand in the information technology and automotive sectors. The analysts expect these factors to contribute to a cyclical economic recovery in the near term.

The Tokyo Consumer Price Index (CPI) is projected to experience fluctuations, with headline inflation predicted to drop significantly below 2.0% year-over-year, largely due to the high base effect from the previous year. However, a rebound in inflation rates is expected in May. This potential slowdown in CPI inflation may provide the Bank of Japan (BoJ) with an opportunity to delay interest rate hikes for several more months.

The BoJ is anticipated to maintain its current policy target, but market attention is likely to turn to its quarterly outlook report. Analysts at ING predict that the report will reflect an upward revision in inflation forecasts, driven by higher inflation in the first quarter, stronger-than-expected wage growth, and a weaker yen. Conversely, disruptions in car-related production might prompt a minor downward revision in economic growth projections.

The ING analysts also suggest that as the year progresses, expectations for a rate hike by the BoJ are likely to increase. This anticipation is based on the economic indicators pointing towards inflationary pressures and the potential for continued economic growth.

InvestingPro Insights

As Japan's economic indicators become a focal point for investors, understanding the financial health and performance trends of companies within key sectors like information technology and automotive is crucial. InvestingPro data reveals that one such company, identified by the ticker FXY, currently has a market capitalization of $300 million. Despite a challenging period reflected by a negative P/E ratio of -153.75 and an operating income of approximately -$0.96 million for the last twelve months as of Q4 2023, the company's price remains at 85.74% of its 52-week high with a previous close at $60.

InvestingPro Tips suggest that investors should consider the broader economic trends such as PMI numbers and inflation forecasts when evaluating investment opportunities. With Japan potentially on the cusp of a cyclical economic recovery, these macroeconomic factors could influence the performance of companies in the affected sectors. Additionally, the InvestingPro platform offers 31 more tips for investors looking to navigate the complexities of the market with the added benefit of using coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription.

This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.