Japanese stock rally stalls due to weakening yen, disappointing earnings guidance, with potential improvement in Q3/Q4.

From Investing.com: 2024-05-27 00:15:23

A rally in Japan’s stock market stalls, Nikkei 225 index remains below record highs. Weakening yen and disappointing earnings guidance cited by BoFA analysts. The index hit a record high in Q1 fueled by optimism on consumption and earnings. Government intervention in FX markets to support yen raises concerns on stock market outlook. Interest rate hikes needed to curb yen depreciation. Soft guidance from Japanese companies and weak economic data dampen sentiment towards stocks. But BoFA analysts expect market conditions to improve in Q3 and Q4, with potential buying opportunities in May-June. Improvement in Japanese economic conditions, higher wages, and capital spending forecasted to brighten outlook for stocks. Larger investment houses expected to remain in Japanese equities. BoFA recommends a mix of blue-chip and value stocks for exposure to Japanese market, with positive outlook inviting flows into domestic demand and manufacturing sectors.



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