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Tokyo Inflation Cools in May, Supporting BOJ’s Cautious Rate Hike Path 
Asian Currencies Steady as U.S.-Iran Ceasefire Extension Hopes Weigh on Dollar 
Iran-U.S. Nuclear Talks Remain Unresolved as Strait of Hormuz Risks Keep Markets on Edge 
Oil Prices Set for Sharp Weekly Losses as U.S.-Iran Ceasefire Hopes Ease Supply Concerns 
S&P 500 Hits Record High as Tech Rally Slows Amid Iran Peace Uncertainty 
South Korea Central Bank Holds Interest Rates Steady Amid Inflation Concerns 
US Dollar Slips as Markets Weigh Potential US-Iran Peace Deal and Oil Price Outlook 
Dollar Gains Slightly as U.S.-Iran Tensions Keep Forex Markets on Edge 
Gold Prices Slip as Stronger Dollar and Iran Peace Talk Uncertainty Weigh on Market 
Nikkei Hits Record High as AI Chip Stocks Power Japan Market Rally 
Canada and Germany Advance Major LNG Supply Partnership 
Wall Street Hits New Highs as U.S.-Iran Ceasefire Talks Boost Market Sentiment 
Japan’s economy expanded at a much slower pace than expected in the fourth quarter of 2025, as weak business investment and soft exports weighed heavily on overall growth. According to official government data released Monday, Japan’s gross domestic product (GDP) increased just 0.2% year-on-year in the three months ending December 31, falling significantly short of market forecasts for 1.6%. The reading marked only a modest recovery from the 2.3% contraction recorded in the third quarter, which was the steepest decline in two years.
On a quarterly basis, Japan’s GDP rose 0.1%, also missing expectations of 0.4%. The primary drag came from capital expenditure, a key measure of business spending, which climbed only 0.2% in Q4 compared to projections of 0.8%. Sluggish corporate investment highlights ongoing uncertainty in the Japanese economy.
External demand, reflecting exports, showed no growth during the quarter as U.S. trade tariffs and escalating diplomatic tensions with China hurt Japan’s export-driven sectors. Chinese consumers reportedly boycotted Japanese goods and avoided travel to Japan following controversial remarks by Prime Minister Sanae Takaichi regarding potential military intervention in Taiwan. Meanwhile, private consumption, another critical pillar of economic growth, edged up just 0.1%, underscoring subdued domestic demand.
Inflationary pressures remained elevated, with the GDP price index rising 3.4%, slightly above expectations of 3.2%. Persistent inflation combined with weak economic activity complicates the outlook for the Bank of Japan, which raised interest rates by 25 basis points in January and signaled that further policy tightening will depend on growth and inflation trends.
The disappointing GDP data increases the likelihood of additional fiscal stimulus. With her ruling coalition securing a supermajority in Japan’s lower house, Takaichi is expected to push for expanded economic support measures, including tax breaks, fiscal payouts, and potentially a supplementary budget in early fiscal 2026 to bolster Japan’s fragile recovery.
