Franklin FTSE Asia ex Japan ETF

FLAX

Market cap $51.7M

Japan's central bank could look past Middle East uncertainty and raise interest rates if inflation becomes a bigger threat to the economy than the risk of slowing growth, Gov. Kazuo Ueda said.

The Bank of Japan should lay out a clear path for policy normalisation after a widely expected rate hike this month ​to stabilise the bond market, Sumitomo Mitsui Financial Group's global markets chief, Arihiro ‌Nagata, told Reuters.

Japan's government is preparing a supplementary budget of around 3 trillion yen, or about $19 billion, to replenish reserves and fund fuel and utility subsidies amid higher energy costs. Takaichi has said overall bond issuance will remain unchanged, even though the extra spending will be financed with deficit-covering bonds.

Japanese stocks were higher in early trade thanks to continued hopes for U.S.-Iran peace talks.

Japan's consumer inflation cooled in April as government measures capped price growth despite rising energy costs.

Energy costs remained in focus as lawmakers pushed subsidy measures. Strong exports supported growth and kept rate hike expectations alive.

Policy board member Junko Koeda said Japan's underlying inflation is likely already at around 2%.

Investors are focusing on AI developments in North Asia. China is coming out of more than three years of deflation measured by the producer price index.

Alexandra Wilson-Elizondo, global co-head and co-CIO of multi-asset solutions at Goldman Sachs Asset Management, discusses why she is excited about the investment opportunities in Japan and says it's important to be selective as the broader momentum in the market fades.

Nikkei 225 continued its strong rally to a fresh record high of 63,788, driven largely by technology-related heavyweights such as SoftBank Group and Murata Manufacturing. Despite the broader medium-term bullish trend remaining intact, technical indicators now suggest a near-term corrective pullback risk below the 64,145 resistance level, supported by a developing bearish "Head & Shoulders" pattern.