Japan Stocks extend gains for fourth day

Headline indices of the Japan share market advanced for a fourth day on Friday, 27 July 2018, thanks to yen depreciation against greenback as fears of a trade war between the U.S. and the European Union eased. However, market gains were capped amid mixed close of US market overnight and on caution ahead to US GDP data expected later Friday and the Bank of Japan's policy meeting next week. Around late afternoon, the benchmark Nikkei 225 index rose 0.25%, or 55.90 points, to 22,642.77. The broader Topix index of all First Section issues on the Tokyo Stock Exchange, meanwhile, added 0.4%, or 6.78 points, to 1,772.56.

ECONOMIC NEWS: The annual consumer inflation rate in Tokyo, a leading indicator of the national average, accelerated in July from June as higher prices for processed food and rents offset slower gains in the costs for overseas holiday tours, data from the Ministry of Internal Affairs and Communications released Friday showed. The Tokyo core consumer price index (excluding fresh food) rose 0.8% on year in June, with the pace of increase accelerated from +0.7% in June.

The Bank of Japan on Friday refrained from conducting a market operation to buy an unlimited amount of Japanese government bonds with a remaining life of 5 to 10 years at a fixed-rate of 0.110% because today's rise in the 10-year JGB yield to what is seen as the upper limit of its "around zero percent" yield target was modest. On early Friday morning, the 10-bond yield rose to 0.100%, which was higher than 0.090% on Monday (up 6 basis points from July 20's close), when the BOJ conducted a fixed-rate operation at 0.110% to stop the bond yield from rising further.

CURRENCY NEWS: The Japanese yen depreciated to lower 111-zone against U.S. dollar on Friday. The dollar was quoted at 111.16-17 yen compared with 111.17-27 yen in New York and 110.69-71 yen in Tokyo on Thursday.

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