Japan’s core consumer prices dropped 2.4% in August year-on-year, the fourth successive month of record falls. Official figures showed core prices, which exclude those of volatile fresh food, fell for a sixth month in a row. The record fall for August was due to lower petrol and other energy costs as well as weak domestic demand.

The central bank has expressed confidence that low interest rates and the stimulus packages it has already implemented will prevent deflation taking hold again. However, the Bank of Japan has already forecast deflation to last until the year to March 2011 and is expected to extend its deflation forecast by another year in its next set of forecasts due out in late October.

Today in the UK, the market will be awaiting the second quarter GDP data and details of mortgage approvals. From the U.S, the market will be watching the S&P/Cash Shiller Home Price Index and the Consumer confidence data for September.

The UK market and the European markets have opened down a quarter of a percent. U.S futures markets are pointing to a slightly negative start when their markets resume trading this afternoon. Futures currently forecast the Dow to open down around 4 points; the Nasdaq and S&P are set to open flat.

Sources: Reuters: BBC: Bloomberg: Lawshare: Deutsche Bank (db): Proquote: Financial Times: Wall Street Journal: CLSA: Sharescope: Market News. Capital Economics: CNBC: Wikipedia: GaveKal:

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