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Yomiuri Shimbun
a day ago
- Business
- Yomiuri Shimbun
Japan's Nikkei Stock Average Inches Higher as Chip Stocks Track Wall Street's Record Finish
TOKYO, July 4 (Reuters) – Japan's Nikkei share average inched higher on Friday, as chip-related stocks tracked a strong overnight performance on Wall Street, though the gains were capped as investors locked in profits after a recent rally. The Nikkei .N225 was up 0.11% at 39,828.2, after hitting an intraday high of 40,012.66. Earlier in the session, the benchmark index hovered between negative territory and modest gains. The Nikkei has slipped 0.8% so far this week and is on course to snap a three-week winning streak. The broader Topix .TOPX was steady at 2,829.67. 'Investors remained optimistic about the market outlook, but the Nikkei is still vulnerable,' said Shuutarou Yasuda, a market analyst at Tokai Tokyo Intelligence Laboratory. 'As soon as it hit the 40,000 level, there was a sell-off to book profits,' he said. Wall Street rallied on Thursday to record closing highs, as chipmaker Nvidia rose closer to a $4 trillion valuation and a surprisingly strong U.S. jobs report cheered investors, who shrugged off dimming chances for an interest rate cut this month. .N Investors remained cautious and refrained from making active bets on Japanese stocks at the end of the week, as they awaited a key U.S. trade tariff deadline next week, strategists said. Chip-related stocks led the gains on the Nikkei, with Advantest rising 2.33% and Tokyo Electron gaining 1%. Banking shares advanced as Japanese government bond yields tracked U.S. yields higher. Solid job gains in the U.S. bolstered the case for the Federal Reserve to keep interest rates on hold. The bank sector .IBNKS.T rose 1.14% to become the top gainer among the 33 industry sub-indexes on the Tokyo Stock Exchange. Shares of Mitsubishi UFJ Financial Group 8306.T rose 1.16%. Uniqlo-brand owner Fast Retailing 9983.T fell 0.81% to weigh on the Nikkei the most.
Reuters
07-04-2025
- Business
- Reuters
Market stress signals are flashing bright
LONDON, April 7 (Reuters) - As a rout in global equity markets deepened on Monday amid tariff turmoil, the signs of stress across financial markets have started to flash brightly. "It's quite clear that the market is in a panic," said Van Luu, global head of FX and fixed income strategy, Russell Investments. here. The asset manager's gauge of investor risk aversion, which incorporates pricing trends and sentiment indicators, was approaching levels last seen in September-October 2022, when global central banks started an unprecedented run of interest rate hikes. Here's a look at just some of the indicators on investors' watchlist. VIX JUMPS Wall Street's closely watched fear gauge, the VIX volatility index (.VIX), opens new tab, jumped to 60 on Monday - its highest level since a global market selloff in August. It closed above 45 on Friday for the first time since the 2020 COVID-19 crisis, and jumped the most on a single day since then. In Europe, a similar indicator -- the Euro STOXX Volatility Index (.V2TX), opens new tab -- was set for its biggest one-day surge in absolute terms since October 2008, the depths of the global financial crisis. DOLLAR DEMAND Demand from non-U.S. investors for dollars has surged, a typical sign that market participants need cash. The rate on three-month cross-currency basis swaps for the euro , a derivative that reflects this demand, traded around -7% from above 12.5% a week ago, its most negative since late 2023. A more negative number indicates higher demand for dollars. JUNK IT Junk bond spreads, which reflect the premium investors get for owning riskier corporate debt, compared to government bonds, have blown out to multi-month highs. On Monday, the iTRAXX Crossover Index an index of five-year European junk bonds, leapt above 420 basis points in its largest one-day rise since March 2023 and to its highest since November that year and nearly 80 basis points higher than it was a week ago. In the United States, the ICE BofA U.S. High Yield Index (.MERH0A0), opens new tab ended last week at its lowest since September, having posted its largest weekly drop since September 2022. BANKS SLIDE Global banks, key to the functioning of the global economy and a barometer for growth, continue to suffer steep share price falls. European and Japanese bank stocks have shed roughly 20% of their value each in the last three trading sessions alone (.SX7P), opens new tab. Japanese banks closed 10% lower on Monday (.IBNKS.T), opens new tab, while U.S. banks slid some 15% last week in their biggest weekly drop since 2020 (.SPXBK), opens new tab. SWAP SPREADS The pressure building in the U.S. bond market, the world's biggest with some $28 trillion in outstanding government debt, is starting to become apparent and one sign of strain is in swap spreads. They capture the premium on the fixed side of an interest-rate swap, which investors use to hedge against rates risk relative to bond yields. U.S. two-year swap spreads - the difference between two-year swap rates and the two-year Treasury yield - briefly dropped to almost -46 basis points on Monday before pulling back to around -24 bps -- near its tightest levels since November.
Reuters
04-04-2025
- Business
- Reuters
European banks extend losses amid tariff selloff
April 4 (Reuters) - Shares in European lenders extended losses on Friday amid a deep selloff in equities sparked by U.S. President Donald Trump's sweeping tariffs. A basket of the region's banks (.SX7P), opens new tab was down 3.3% to its lowest since early February at 0710 GMT after falling 5.5% on Thursday. Losses over the past two trading days hit 8.5%, the most for this period in three years. Banking stocks elsewhere tanked overnight, with shares in many large Wall Street institutions, such as Goldman Sachs (GS.N), opens new tab, Morgan Stanley (MS.N), opens new tab and JPMorgan (JPM.N), opens new tab falling between 7-9%, marking their largest daily declines since 2020. An index of financial shares in Japan fell by as much as 11% at one point on Friday (.IBNKS.T), opens new tab.
Reuters
04-04-2025
- Business
- Reuters
Japan bank shares hammered as tariffs ignite fears about global growth
TOKYO, April 4 (Reuters) - Shares of Japanese banks plunged on Friday as U.S. President Donald Trump's tariffs sparked fears of a downturn in global growth that could choke off a fragile recovery and delay rate increases in the world's fourth-largest economy. The Tokyo index of banking stocks (.IBNKS.T), opens new tab was down 10% at 0537 GMT. Shares of Mitsubishi UFJ Financial Group (8306.T), opens new tab, Japan's biggest bank by assets, fell 10%. The hit to banking stocks in Tokyo, some of the world's largest lenders by assets, was a grim reminder of the global impact of Trump's protectionist policies and the shakiness of Japan's own exit from deflation. After years of stop-start growth and frozen wages, Japan last year finally appeared to break through its long malaise, as prices - and wages - began to rise. In a hugely symbolic move, the central bank raised interest rates for the first time in almost two decades. Whether that growth path can continue, analysts have said, depends to a large extent on what happens next in the United States. The world's largest economy is the main market for Japanese automakers, the country's economic engine, as well as other industries.
Reuters
20-02-2025
- Business
- Reuters
Investors target Japan bank shares in bet on rising BOJ rates
Summary Companies Japan bank share index near 18-year high Bank sector funds attract net $761 mln in second-half 2024 Japan megabanks head towards record annual income TOKYO, Feb 20 (Reuters) - Japanese bank shares have become highly popular with investors betting on rising Bank of Japan interest rates as uncertainty over the central bank's plans make the stocks a safer bet than government bonds and the yen. Shares of one of the biggest banking groups, Mitsubishi UFJ Financial Group (MUFG) (8306.T), opens new tab, have hit successive record highs this week as investors bet rising interest rates would boost lending margins and profits for a sector that has been dormant during the nation's three decades of deflation. A bank share index (.IBNKS.T), opens new tab is near an 18-year high, up 8% so far this year as of Wednesday against the broader Topix index's (.TOPX), opens new tab 0.8% slide. Masashi Akutsu, chief Japan equity strategist at Bank of America, said bank shares have become the symbol of Japan's turnaround from deflation and rising rates. "We do not know where Japan's terminal rate will be, but it is likely that interest rates will go higher and bank earnings are strong, so bank shares are an overweight," Akutsu said. The Bank of Japan ended its negative rates policy in March last year and has since pushed its short-term rate up to 0.5% as inflation has crept towards its 2% target. But the BOJ has provided few clues on where it expects rates to peak, and market participants who once thought rates would peak at 1% now suspect the terminal rate could be higher. Yields on Japanese government bonds (JGBs) have soared, meanwhile, with 10-year yields now around 1.43%, double levels of a year ago, meaning the scope to make money short-selling these bonds is limited. The yen too is not an easy BOJ trade, driven more by the vagaries of U.S. interest rates and the dollar. THE CASE FOR BANK SHARES Bank shares, however, are hot. LSEG Lipper data shows Japanese banking sector funds attracted a net $761 million in the second half of 2024, the largest semi-annual inflow in a decade. Aided by rising rates, all three of Japan's "megabanks", including MUFG and Sumitomo Mitsui Financial Group (8316.T), opens new tab are on course for record annual income for the fiscal year ending on March 31, 2025. The banks' sale of their own equity holdings has proven another tailwind. They also pay higher dividends, at a yield of 3.2%, compared with just 2.2% for the overall market. The banks' price-to-book ratios (PBR) stand at 0.97 compared with 1.5 for the overall market and 1.22 for global banks, an indication they are undervalued relative to their assets. "Banks had been cutting costs to survive in the environment without interest rates and they made a significant outcome," said Hiroyuki Ueno, chief strategist at Sumitomo Mitsui Trust Asset Management. "Now they have a tailwind that will boost their top line, their valuations could be much higher."
