Tokyo stocks swayed by U.S. CPI, Japanese earnings next week

Jiji Press

17:44 JST, January 8, 2022

TOKYO (Jiji Press) — Tokyo stocks will be sensitive to U.S. consumer price data and earnings reports by Japanese companies this week, analysts and brokers said.

Last week, the Nikkei average of 225 selected issues listed on the Tokyo Stock Exchange’s First Section lost 313.15 points, or 1.09%, to 28,478.56.

After a rosy start to 2022 on Tuesday with fresh money pouring in for the new year, stocks soon fell victim to a sell-off, after minutes of the U.S. Federal Reserve’s policy meeting signaled earlier-than-expected interest rate increases. A surge in COVID-19 cases in Japan also dampened sentiment.

This week, the Nikkei is expected to move mainly between 28,300 and 29,200, analysts and brokers said. The Tokyo market will be closed on Monday for a national holiday.

They said that market players will closely watch the U.S. December consumer price index, slated to be released Wednesday, which may give hints about the timing of the Fed’s rate increases.

“Combined with U.S. employment statistics, the CPI will likely sway U.S. interest rates, which in turn will especially impact growth stocks,” said Masayuki Otani, chief market analyst at Securities Japan Inc.

Investors will also pay attention to earnings from Japanese retailers, such as Aeon on Wednesday and Fast Retailing and Seven & i on Thursday, brokers said.

“Earnings for the September-November quarter are expected to be rosy as that was before the latest wave of coronavirus infections,” Maki Sawada, strategist at Nomura Securities Co., said. “Taking into consideration the fresh infection spike, investors will mainly focus on earnings forecasts and comments about the current state of business.”

The Tuesday release of an earnings report by industry bellwether Yaskawa Electric is also on investors’ minds, said Chihiro Ota, general manager for investment research and investor services at SMBC Nikko Securities Inc.