Bloomberg: Japan stocks might fall after recent rally

02 December 2022 97
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Source: Bloomberg

Author: Aya Wagatsuma

Article: Original article

Publication date: Friday, December 2, 2022

 

Rally in Japan stocks is likely to stop by the end of the year, as a full-scale economic recovery is required for supporting upward trend, as it’s considered by Citigroup Inc.

According to strategists, the rally which has been going on for about a month might soon end up.


The recent growth in Japanese stocks narrowed the gap between economic indicators and the market. As it was written by strategists in a note, any further growth of stocks would be difficult without actual economic recovery in the country.

According to strategists’ point of view, a growth in stock prices that began in early October corresponded with a peak in long-term interest rates in the U.S. They also added that a renewed increase in long-term rates will cause a decline in stock prices.


Japanese stocks have outperformed their peers in local currency terms this year as a weak yen boosted exporter earnings and an economic recovery revived consumption. Citigroup has previously warned of a "sharp correction" in stocks in the first half of 2023, as the market had not fully reflected the risk of a recession in major economies.


Forecast:

The decline of the Japan’s Nikkei 225.

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