According to FX168 Financial News (Asia-Pacific), on Friday (December 20), the Japanese stock market fell due to a surge in core inflation in November, increasing market pressure for the central bank to raise interest rates.

At the close, the Nikkei 225 Index fell by 0.29%, closing at 38,702 points, with a weekly decline of 1.66%, marking the largest weekly drop since early November. The Topix Index decreased by 0.44%, closing at 2,702 points, with a weekly decline of 1.19%, the largest weekly decline since mid-October. #Japan market#

In the primary market, technology stocks, industrial stocks, and consumer stocks led the market decline.

On Friday, the Japanese stock market dropped for the sixth consecutive trading day as investors reacted to stronger-than-expected inflation data.

Japan's overall inflation rate rose to 2.9% in November, the highest in three months, up from 2.3% in October, while the core inflation rate increased to 2.7%, exceeding market expectations of 2.6%. This data supports market expectations for a hawkish monetary policy stance from the Bank of Japan (BOJ).

However, the Bank of Japan decided to keep interest rates unchanged in December, citing the need to assess wage trends, global economic uncertainties, and the policies of the incoming USA administration. Moreover, BOJ Governor Kazuo Ueda stated at a press conference that it would take a considerable amount of time to evaluate the outlook for domestic wages and overseas economies, particularly the USA economy, and the stock market also failed to gain substantial support.

The Federal Reserve indicated it would proceed with interest rate cuts more cautiously in 2025, having already lowered rates by 25 basis points on Wednesday. This news led to a nearly 3% single-day drop in the S&P 500 index, marking the largest single-day decline since early August.

The strengthening of the US dollar and weakening of the yen caused the USD/JPY exchange rate to reach 157.93 on Friday, the highest level since mid-July. Japanese Finance Minister Shunichi Suzuki and Chief Forex Diplomat Masato Kanda expressed concern over the sharp depreciation of the yen, stating that officials are prepared to take 'appropriate measures.'

As the weekend approaches, investors remain highly vigilant regarding the future trend of the yen, said Maki Sawada, a stock market strategist at Nomura Securities.

She stated that currency volatility may have suppressed a rebound that could have occurred after a week filled with significant market events.

Nevertheless, Auto Manufacturers benefit from the weaker yen, which helps increase the value of overseas sales. Toyota rose by 1.74%.

The Real Estate Sector performed the best among the 33 industries on the Tokyo Stock Exchange, rising by 2.39%, as yields on Japanese Government Bonds fell to their lowest point in a month.

Bank stocks, which typically fluctuate in sync with bond yields, were the worst-performing sector, decreasing by 2.67%.

Kadokawa's stock price fell to the daily limit of a 16% decline after the company announced a capital partnership with Sony instead of the widely anticipated acquisition. Sony's stock price rose by 0.74%.