The current bull market that has seen the end of Japan’s lost three decades should be called the “end of deflation” market, says JPMorgan’s top Japan strategist.

The note from JPMorgan’s Rie Nishihara came as inflation data out of Japan once again came in on the hot side, with core CPI sliding to 2% from 2.3% but topping estimates of 1.8%.

The yield on the 2-year Japanese government bond
rose as high as 0.176%, the highest level since 2011.

The Nikkei 225
finished virtually unchanged at 39,239. It’s up 43% over the last 52 weeks. The Japanese yen rose 0.3% to 150.22 per U.S. dollar.

Nishihara said the end of deflation became the theme after core CPI reached 2% for the first time, in April 2022. Share prices bottomed in Jan. 2023 after the Bank of Japan’s surprise revision of its yield curve control policy, which happened the previous month.


She said there’s a roadmap to a sustainable level of 40,000 on the Nikkei 225, as the focus is now on the Topix
the market cap-weighted index which had a bubble high of 2,884.80 in Dec. 1989. Share price gains need to spread beyond semiconductor stocks for the Topix to take out that high, Nishihara said.

The Topix finished at 2,678.46, up 0.2% on the day.

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