Japan Market edges up ahead of US inflation data

Japan share market finished session edged higher on Thursday, 12 January 2023, registering fifth day of consecutive gains, on following the broadly positive cues from Wall Street overnight, as optimism that the U.S. Federal Reserve may slow the pace of its interest rate hikes.

However, market gains capped after ahead of U.S. consumer price index for December later today in global day and reports that the Bank of Japan plans to review the side effects of its ultraloose monetary policy at its two-day policy meeting scheduled for next week.

The 225-issue Nikkei Stock Average index edged up 3.82 points, or 0.01%, to finish at 26,449.82. The broader Topix index of all First Section issues on the Tokyo Stock Exchange was up 6.93 points, or 0.36%, to 1,908.18.

Investors waiting for the U.S. consumer price index for December, due out later on Thursday which would provide more clues on the Federal Reserve's rate hike trajectory. The December CPI report will inform investors as to whether the Federal Reserve needs to move forward with more aggressive interest rate hikes to tame inflation, or if the central bank can pull back as inflation is showing signs of steadily cooling off.

Shares of banks and financials advanced on expectations that the BOJ's potential shift toward monetary tightening may boost their earnings. Mizuho Financial Group rose 5.4% to 2,007.5 yen, while Sumitomo Mitsui Financial Group gained 4.4% to 5,580 yen.

Shares of real estate issues suffered losses as a rise in interest rates would lift mortgages rates and dent housing demand. Mitsui Fudosan shed 2.5% to 2,302 yen.

ECONOMIC NEWS: Japan posted a current account surplus of 1,803.6 billion yen in November, the Ministry of Finance said on Thursday - up 16.4% on year. Exports were up 20.7% on year at 9.008 trillion yen and imports jumped an annual 33.8% to 10.546 trillion yen for a trade deficit of 1.537 trillion yen. The capital account showed a deficit of 10.8 billion yen, while the financial account saw a surplus of 938.1 billion yen.

A measure of the public assessment of the current situation of the Japanese economy weakened in December, survey data from the Cabinet Office showed. The current conditions index of the Economy Watchers' Survey, which measures the present situation of the economy, fell to 47.9 in December from 48.1 in November. However, a reading below 50 suggests pessimism. The outlook index that signals future activity improved to 47.0 in December from 45.1 in the previous month. In October, the reading was 46.4.

CURRENCY NEWS: The yen was around upper-130 zone against the U.S. dollar in Asian trade on Thursday. The yen stood at 130.97 against US dollar, down by 1.14% from previous day close of 132.47, after trading in the range between 130.88-132.49.

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