Impact of Japan’s Largest Pay Raise on Nikkei 225

7月4日

Impact of Japan’s Largest Pay Raise on Nikkei 225: Market Insights & Trading Ideas

Historic Pay Raise Boosts Japanese Economy

By Eric Lee, Sales Director from Phillip Nova

On March 22nd, Japan’s largest union group, Rengo, announced that Japanese firms have
agreed to raise salary by 5.25% this year. This is the biggest raise the country had seen
since 2013. Given that Personal Consumption constituted 55% of Japan’s GDP, the pay
raise is deemed to be positive for the economy and stock market as well.
Source



Correlation Between Disposable Income and Nikkei 225
Attached is the monthly chart comparing the performance of Nikkei 225 (in blue) with
the 12-Months Average of Japan’s Disposable Personal Income since 1996. Their
correlation explained the impact having higher disposable income had on the stock
prices.

Since its bottom in December 2023, the 12-Month Average Disposable Personal Income
had been rising. Market should expect this to rise further with the announcement of
higher salary by the union group

Nikkei 225 Breaks Above Symmetrical Triangle Formation

On a short-term basis, Nikkei 225 had broken above the Symmetrical Triangle formation
it’s been in since April. Based on Classical Technical Analysis technique, we can set the
target level for such formation at 42,700 and the cut-loss level at below the triangle
formation which is at 37,900 at the moment.

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