Kumamoto earthquake halts semiconductor and auto plants, raising concerns over production and economy

Kumamoto earthquake halts production at major plants including TSMC, Sony, Toyota A magnitude 7 earthquake that struck Kumamoto Prefecture on the 29th caused semiconductor and automobile production bases to successively suspend operations. There is no prospect of recovery, and concerns are growing over the impact on the entire supply chain. 12

FOMC holds rates as expected, three members vote for hike; dollar falls, yen at 163 The U.S. Federal Open Market Committee voted 9-3 on the 29th to keep the policy rate at 3.50-3.75%. Presidents Hamack, Kashkari, and Logan voted for a rate hike, casting dissenting votes, and markets continued an inflation-wary stance. 3

SK Hynix records record profit but misses estimates, shares plunge; AI overinvestment fears spread South Korea's SK Hynix posted an operating profit for the April-June quarter that surged 557% year-on-year to a record high but fell short of analyst expectations, sending its stock price down 10%. Concerns over the sustainability of AI investment led to selling of semiconductor stocks in the Japanese market as well, with the Nikkei average falling 930 yen. 45

Government council recommends 4.9% minimum wage hike to 1,176 yen per hour A Ministry of Health, Labour and Welfare council recommended on the 29th raising the national average minimum hourly wage by 4.9% to 1,176 yen. The second straight year of a large increase is expected to support the virtuous cycle of wages and demand that the BOJ seeks. 6

PM Takaichi adjusts plan to cut food consumption tax to 1% for 2 years from next April Prime Minister Takaichi solidified a policy on the 29th to lower the consumption tax rate on food from the current 8% to 1% at the Social Security National Council, and is expected to announce it on the 30th. The tax cut would be for two years, and securing alternative revenue sources is a challenge. 78

BOJ starts July meeting, likely to lower price outlook, hold rate at 1% The Bank of Japan began its two-day monetary policy meeting on the 30th. While a rate hold is considered certain in the market, the Outlook Report to be released alongside is expected to lower the CPI forecast for fiscal 2026. Governor Ueda's press conference will be watched for his stance on an early additional rate hike. 910