Nikkei rises as Kishida resignation is announced, US inflation data affects market

(MENAFN) Japan's NIKKEI index experienced an increase on Wednesday, influenced by the announcement of Japanese Prime Minister Fumio Kishida's intention to step down later this year and anticipation of U.S. inflation data. The Nikkei closed up by 0.6 percent at 36,442.43, marking its third consecutive day of gains. Similarly, the broader Topix index saw a 1.1 percent rise, finishing at 2,581.90. The initial boost in the Nikkei was driven by reports that Kishida would step down as leader of the ruling party in September, a move later confirmed by the prime minister himself during a televised press conference.

Despite the initial market reaction to Kishida's resignation, analysts suggested that the long-term impact on stock prices might be limited. Charu Chanana, global market strategist at Saxo, indicated that Kishida's diminishing popularity could prevent a significant negative impact on the stock market. Japanese equities followed the positive trend observed on Wall Street, where U.S. producer price increases had bolstered expectations of an impending interest rate cut by the Federal Reserve.

However, market gains were moderated as investors began to lock in profits and shift their focus to upcoming U.S. consumer price data. Although this data might strengthen the case for a Federal Reserve rate cut, concerns about potential recession risks and other economic indicators, such as retail sales and employment figures, remain crucial. Chanana highlighted that any signs of economic strain could influence the yen and potentially lead to further declines in Japanese stocks. 

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