Prime Highlights:
Japanese stocks saw a notable increase, with the Nikkei 225 rising 1.12% to 28,220.9 and the Topix advancing 1.20% to 2,766.78, driven by expectations that the government will propose a record ¥735 billion budget for the fiscal year starting in April.
Japanese government plans the biggest budget in its history aimed at increasing social security cost and needs of servicing debt.
Bank of Japan Governor Kazuo Ueda forecasted that the country’s economy would stabilize within 2025 to boast strong 2% inflation for wage growth.
Key Background:
Japan’s stock market saw a 1.12% increase on Nikkei 225 at 28,220.9 points. The broader Topix index gained 1.20%, closing at 2,766.78 points. This came as the Japanese government announced news that it is preparing a $735 billion budget for fiscal 2025, starting in April, targeting both the rising social security costs and debt-servicing obligations.
To support the economic outlook in Japan, Bank of Japan Governor Kazuo Ueda said the economy will be reaching stable 2% inflation by 2025 with expected wage growth. Optimism drove the yield on the 10-year Japanese government bond up by 1.3 basis points to 1.078%, while the yen traded at 157.16 against the U.S. dollar, reflecting market expectations of potential interest rate hikes.
In the corporate sector, the shares of Japanese automakers Nissan and Honda rose by 6.58% and 3.84 percent respectively after both companies begun formal merger talks that will help in creating the world’s third largest automaker in terms of sales. Japan Airlines fell 0.24 percent after a cyber-attack that affected both local and international flights while its systems were restored.
The rest of the world remained bearish in sentiments. The Kospi index declined by 0.44 percent and the Kosdaq declined by 0.66 percent. South Korean opposition forces continue to employ a policy of implementing the impeachment process against Acting President Han Duck-soo, amidst increased political uncertainty. On the mainland, CSI 300 went up by 0.19 percent to 3,404.52 following the World Bank’s upgrading the country’s growth projection for this year. Meanwhile, Singapore’s manufacturing output increased 8.5 percent in November, below expectations.