Robert Carnell: “Japan’s stock rally is not special”
4 July 2024
Reading time: 5 min
Japan’s stock market has hit record highs, driven by strong sector performance and economic optimism. Speaking to Reuters Market Insights, Robert Carnell, ING’s chief economist for Asia Pacific, attributes much of the rally to the yen’s weakness and warns that its future may hinge more on US Federal Reserve policy than domestic action.
Strong performances from automakers, technology firms and banks has driven the Nikkei and the TOPIX to record closing highs. Positive expectations for Japan’s economic growth in the second half of the year has also fuelled the upward trend. However, the yen remains near a 38-year low, raising concerns about potential government intervention.
Robert Carnell, chief economist for ING in Asia Pacific, joined Reuter’s Market Insights to offer a critical perspective on these developments. He suggests that while Japan’s stock market growth is impressive, it is significantly influenced by the yen’s weakness. In U.S. dollar terms. Japan’s stocks have risen by about 7%, on par with European markets. Carnell emphasises that past interventions by the government drew limited success and changes in Japan’s monetary policy is critical in stabilising yen.
Looking ahead, Carnell predicts the Bank of Japan to implement a modest interest hike, though rates are still far lacking behind those in the U.S. The future of yen, he suggests, may heavily depend on U.S Federal Reserve policies rather than Japan’s own actions.
Originally published in Reuters: Opens in a new tabhttps://www.youtube.com/watch?v=QMt8BvmcfAU