Snapshot: The Nikkei 225 closed Friday up 0.28% at 71,250, cementing an impressive 8% weekly gain as domestic core inflation held steady at 1.4% in May. This stable print, combined with Deputy Governor Himino’s measured currency comments to parliament and the April policy minutes, reassures the market that the Bank of Japan remains on a highly gradualist normalization path.
- Steady domestic core CPI at 1.4% and WTI crude falling to $84.65 keep imported inflation fears in check, supporting local exporter margins and keeping the 71,500 resistance level in play.
- Risk appetite faces a tactical hurdle heading into the New York open as the VIX rises to 18.44 and US yields edge up, with the US 2Y print at 4.2% testing global equity valuations.
Bias into NY: We lean structurally long Nikkei targets towards 71,800, as the combination of a patient Bank of Japan and robust AI-led tech demand overrides the headwinds of higher US real rates.