Japan’s stock rally is forecast to slow in second half of 2024

Investors expect the pace of Japan’s stock market rally to slow in the second half, increasing the risk they will shift more money to rival markets.

The benchmark Topix index will climb about 2.9% to 2,890 by the end of the year, while the 225-issue Nikkei average will rise about 4.8% to 41,489, according to the average estimates from asset managers and strategists surveyed by Bloomberg. That’s a fraction of the roughly 18% advance by the gauges in the first six months. The broader Topix surpassed its March intraday peak on Friday to a 34-year high, led by financials.

Concern over the yen’s continued weakness is weighing on market sentiment. Additionally, consumers and companies have cut back on spending, while a third of Bank of Japan watchers surveyed earlier this month by Bloomberg forecast a rate hike in July. Inflation data for Tokyo released Friday morning picked up in June, likely keeping a potential interest rate hike on the agenda for discussions at the Bank of Japan’s July meeting.