Global Markets Mixed as Japan's Inflation Dips
Global markets are mixed, with Wall Street ending lower on varied economic data while US-Iran tensions boosted oil prices. In Asia, Japan’s headline inflation dipped below the Bank of Japan’s target for the first time in nearly four years, potentially signaling a shift in monetary policy.
- Japan's headline inflation rate slowed to 1.5% in January, a significant drop from 2.1% in December and the lowest rate since March 2022. This marks the end of a 45-month period where inflation exceeded the Bank of Japan's 2% target. - The core inflation rate, which excludes fresh food and is closely watched by the Bank of Japan, fell to 2.0% in January from 2.4% the previous month. A further stripped-down "core-core" measure, which also excludes energy prices, slowed to 2.6%. - The Bank of Japan, which holds its next policy meeting on March 18-19, is now seen as having more flexibility. Analysts suggest the central bank won't be in a rush to raise its policy rate from the current 0.75% as it waits for evidence of broader domestic demand. - Heightened geopolitical risk in the Middle East has pushed Brent crude oil futures to around $71.50 a barrel, a weekly gain of about 6%. West Texas Intermediate (WTI) crude also saw a weekly increase of roughly 7%, trading near $66.22 a barrel. - Recent U.S. economic data has been mixed, contributing to market uncertainty. The advance estimate for fourth-quarter 2025 GDP showed a slowdown to 1.4% annual growth, compared to 4.4% in the third quarter. - The Conference Board's Leading Economic Index for the U.S. fell for the fifth consecutive month in December, pointing to continued economic softness in early 2026. The decline was driven by weak consumer expectations and a drop in new orders for manufacturers.
