Japanese Prime Minister Fumio Kishida has revealed an economic stimulus plan aimed at encouraging investment and wage growth. The plan includes tax breaks for domestic investments and reductions in tax and social security burdens. Kishida hopes to achieve a virtuous economic cycle of capital investment, wage growth, and investment in people. The stimulus package is also expected to include tax cuts for income from strategic fields such as semiconductors and batteries.
In Japan, the service producer price index rose at its fastest pace in a year, climbing 2.1% year on year in August. This marks the third consecutive month of quickening inflation in the service sector. On a month-on-month basis, the service PPI increased by 0.1%. This growth reflects a stronger wholesale inflation in the service industry and indicates increasing demand in the domestic market.
Bank of America has upgraded three European luxury stocks that have shown resilience amidst the broader sector’s negative trends. The MSCI index of European luxury goods companies has fallen 16% since its recent high in April. Despite this, Bank of America sees potential in these stocks and believes that one of them is undervalued. Despite the challenges faced by the luxury sector, these stocks have shown promising performance and market resilience.
In a note, Moody’s Investors Service warned that a US government shutdown would have negative implications for the country’s credit rating. The note stated that a shutdown would highlight the constraints caused by political polarization on fiscal policymaking. Moody’s currently maintains an AAA stable rating on the US government, while Fitch downgraded its rating from AAA to AA+ in August. Given the impending expiration of federal spending laws at the end of September, the risk of a government shutdown is a pressing concern for the US economy.