The larger-than-expected slowdown in wage growth pressured the Bank of Japan to pivot, and Japanese stocks rose sharply.
Earlier today, Japan's Ministry of Health, Labor and Welfare released data on workers' cash income for NovemberJapan's labor cash income slowed sharply to 0 in November, beating expectations2%, well below the expected 15%Real wages fell 3% year-on-year, also below expectations of 2%.
Wage data that slowed more than expected weighed on tightening expectations, and Japan** extended yesterday's rally, as of **,The Nikkei 225 index closed up 2%, continuing to hit a new high
The Topix index followed suit, closing up 13%，The highest level since March 1990
The Nikkei 225 and the Topix index both reportedly achieved 25% annual gains last yearIt is the best performance in the past 10 years
Bullish sentiment on Japanese stocks remains strong as the Japanese authorities intend to improve shareholder returns, deflation is fading, and prices are moderate**.
saxo capital markets pte.Market strategist Charu Chanana pointed out that there were two potential crises for Japan**: one is that the Bank of Japan has shifted to expectations, and the other is that the yen may appreciate.
But it was announced todayWage data slowed more than expected, the outlook for Fed rate cuts was uncertain, and the Noto Peninsula occurred in January**, resulting in "both resistance seems to have been postponed." ”
According to Daiwa***, the Fed's interest rate cut will push up the overall valuation of Japan**, ** by the end of 2024, the Nikkei 225 index will reach 39,600 points approaching 40,000 points.
Bank of Japan Governor Kazuo Ueda is highly concerned about wage trends and has been seeking a virtuous circle between wages and prices to normalize monetary policy.
Just last month, Kazuo Ueda saidIf the likelihood of sustained achievement of the 2% inflation target "continues to climb", the Bank of Japan will consider exiting the negative interest rate policy。The remarks became the clearest signal to date about the possibility of ending ultra-loose monetary policy. In March of this year, the management of major Japanese companies will hold their annual wage negotiations ("spring fights") with labor unions. Earlier, Japan's largest trade union federation urged companies to raise wages by at least 5% in principle.
Kazuo Ueda said last month that even if the authorities do not get the full results of the small company pay discussions, some decisions may be made, and the results of the small company pay deal may not be announced until the summer.
The remarks sparked speculation in the market:The Bank of Japan is likely to announce a rate hike at its April monetary policy meeting
There is a ** view that although the wage data has slowed sharply, it may suppress expectations for the Bank of Japan's pivot to a certain extent, butEconomists still likely that the Bank of Japan will start raising interest rates in the coming months
Another piece of evidence in favor of the shift is that core wages for regular employees in Japan slowed by 01% to 19%, which was previously only achieved in the era of the bubble economy.
Bloomberg economist Taro Kimura said:
"Behind the unexpectedly weak cash receipts of Japanese workers in November, the Bank of Japan ushered in another piece of good newsThe basic salary of regular employees increased year-on-year to 19%, which is the growth rate of the early 90s before Japan fell into the quagmire of low growth.On 23 January, the Bank of Japan will hold its latest interest rate decision meeting, at which time it will release its latest interest rate policy and economic growth forecasts.
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