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Free Malaysia Today
29-05-2025
- Business
- Free Malaysia Today
Japanese long-term bonds see 4th weekly outflow on inflation, fiscal concerns
Japanese stocks remained popular for an eighth successive week as foreigners added a net ¥309.3 billion worth of domestic shares to their portfolios. (Bloomberg pic) TOKYO : Foreigners sold Japanese long-term bonds for a fourth straight week through May 24, adding to evidence that investors are exiting long-term bonds in crowded developed markets owing to worries about inflation and interest rates. According to Japan's finance data ministry, foreigners withdrew a net ¥334.4 billion (US$2.3 billion) from long-term Japanese bonds in a fourth successive weekly net sale. Short-term bills also witnessed a net ¥2.41 trillion of outflows, the highest for a week since Dec 21, 2024. Long-dated bonds have come under pressure globally in recent weeks, with Japan seeing sharp sell-offs as the central bank scales back bond purchases and a political debate over stimulus intensifies. Yields on 30- and 40-year Japanese government bonds have surged to record highs, as demand at auctions for ultra-long debt weakens, prompting officials to weigh shifting issuance toward shorter maturities. Meanwhile, Japanese stocks remained popular for an eighth successive week as foreigners added a net ¥309.3 billion worth of domestic shares to their portfolios. In parallel, Japanese investors bought a modest ¥92 billion of foreign long-term bonds, a sharp reduction in net purchases from 2.83 trillion of net accumulation in the prior week. They, however, sold about ¥42.7 billion of short-term bills. In overseas equities markets, domestic investors were net sellers for a second straight week to the tune of ¥524.7 billion.
CTV News
28-05-2025
- Business
- CTV News
World shares are mixed after a Japanese government bond auction falls flat
A dealer watches computer monitors at a dealing room of Hana Bank in Seoul, South Korea, Wednesday, May 28, 2025. (AP Photo/Lee Jin-man) World shares are mixed after a closely watched auction of 40-year Japanese government bonds fell flat as worries mount over growing levels of debt. In early European trading, Germany's DAX gained 0.2 per cent to 24,283.71, while the CAC 40 in Paris was up 0.3 per cent at 7,847.20. Britain's FTSE 100 rose 0.2 per cent to 8,794.80. The future for the S&P 500 slipped 0.1 per cent while that for the Dow Jones Industrial Average was down 0.2 per cent. In Asian trading, Japan's Nikkei 225 index was nearly unchanged at 37,722.40. Government debt and bonds have become an increasingly important issue for markets in wealthy countries in recent weeks as yields have climbed around the world. Wednesday's auction of about 500 billion yen (about US$3.5 billion) drew a bid-to-cover ratio of just 2.21, the lowest level since July 2024. The ratio of the amount of bonds offered versus the amount of bids received is seen as a measure of demand. When demand is slack, bond prices fall and yields rise. After years of pumping money into the economy through hefty bond purchases, Japan's central bank has been gradually cutting back, undermining demand at a time when other institutional investors also have been buying fewer JGBs. A recent auction of 20-year JGBs also found relatively few buyers. But analysts said worries eased a bit after Japan's Finance Ministry recently sent a questionnaire to bond investors that they took as a signal of efforts to calm the market by suggesting it might issue less debt. When yields softened earlier in the week in Japan, the bond market rallied, Thomas Matthews of Capital Economics said in a report. The 'somewhat soft 40-year JGB auction seems to have contributed to a slight souring of the global mood,' he said. The dollar fell to 144.16 Japanese yen from 144.36 yen. The euro rose to $1.1322 from $1.1329. Elsewhere in the region, Hong Kong's Hang Seng index lost 0.5 per cent to 23,258.31, while the Shanghai Composite index ended flat at 3,393.93. Australia's S&P/ASX 200 edged 0.1 per cent higher to 8,396.90. The S&P/NZX 50 in New Zealand fell 1.8 per cent after the central bank cut its benchmark interest rate by 0.25 percentage points, as expected, to 3.25 per cent. In South Korea, the Kospi jumped 1.3 per cent to 2,670.15, helped by a global rally in technology shares. Samsung Electronics' shares climbed 3.7 per cent while SK Hynix was up 2.7 per cent. In Taiwan, the Taiex added 0.1 per cent. India's Sensex slipped 0.1 per cent. Oil prices rose after the U.S. authorization to Chevron to export crude from Venezuela expired Tuesday. The Trump Administration has been trying to wind down U.S. reliance on Venezuelan energy. U.S. benchmark crude oil gained 45 cents to $61.35 per barrel. Brent crude, the international standard, was up 42 cents at $63.99 per barrel. On Tuesday, Wall Street resumed its roller coaster ride created by U.S. President Donald Trump's trade policies after he delayed his threatened 50 per cent tariff on imports from the European Union. U.S. markets were closed for Memorial Day on Monday, and the S&P 500 leaped 2.1 per cent in its first trading since Trump's announcement. The Dow Jones Industrial Average added 1.8 per cent and the Nasdaq composite gained 2.5 per cent. Nvidia rallied 3.2 per cent and was the strongest single force driving the S&P 500 higher ahead of its profit report coming on Wednesday. It's the last to report this quarter among the 'Magnificent Seven' Big Tech companies. Talks with the EU have raised hopes the United States can reach a deal with one of its largest trading partners, helping to keep global commerce moving and avoiding a possible recession. Trump declared a similar pause on his stiff tariffs for products coming from China earlier this month, which launched an even bigger rally on Wall Street at the time. Surveys have shown U.S. consumers are concerned over the economy's prospects and where inflation may be heading because of tariffs. However, a report Tuesday by the Conference Board said confidence among U.S. consumers has improved more in May than economists expected. Treasury yields eased to take some of the pressure off the stock market. The yield on the 10-year Treasury fell to 4.47 per cent early Wednesday from 4.51 per cent late Friday. It had risen last week, in part because of worries about the U.S. government's rapidly increasing debt. Elaine Kurtenbach, The Associated Press
Globe and Mail
27-05-2025
- Business
- Globe and Mail
Stocks Soar as Trade Tensions Ease and Bond Yields Fall
The S&P 500 Index ($SPX) (SPY) today is up +1.59%, the Dow Jones Industrials Index ($DOWI) (DIA) is up +1.25%, and the Nasdaq 100 Index ($IUXX) (QQQ) is up +1.93%. June E-mini S&P futures (ESM25) are up +1.58%, and June E-mini Nasdaq futures (NQM25) are up +1.92%. Stock indexes today are trading higher after President Trump over the weekend extended the deadline for the European Union to face 50% tariffs until July 9 after threatening to impose a 50% tariff on EU goods starting June 1. Stocks also garnered support from today's comments from National Economic Council Director Hasset, who said, "We'll probably see a few more trade deals, even this week," with India among the countries that are close to securing a deal. Gains in stocks accelerated today after the Conference Board US May consumer confidence index rose more than expected to a 3-month high. Stocks also found support on a slide in bond yields spurred on by speculation that Japan could change its debt sales plans, which could lead to stronger demand for US debt securities if Japan cuts its debt issuance. The 10-year T-note yield is down -5 bp to 4.46%. Bloomberg News reported that Japan's Finance Ministry sent a questionnaire to market participants regarding the appropriate issuance amounts for government bonds, a sign that the ministry may seek to reduce debt issuance. US Apr capital goods new orders nondefense ex-aircraft and parts fell -1.3% m/m, weaker than expectations of -0.2% m/m and the biggest decline in 6 months. The US Mar S&P CoreLogic composite-20 home price index rose +4.07% y/y, weaker than expectations of 4.50% y/y and the smallest increase in 1-1/2 years. The Conference Board US May consumer confidence index rose +12.3 to a 3-month high of 98.0, stronger than expectations of 87.1. The US May Dallas Fed manufacturing survey general business activity rose +20.5 to -15.3, stronger than expectations of -23.1. Minneapolis Fed President Kashkari said he favors maintaining the fed funds rate at current levels until there is more clarity on the path of tariffs and their impact on prices. The markets are discounting the chances at 2% for a -25 bp rate cut at the next FOMC meeting on June 17-18. The markets this week will focus on any tariff news or signs of new trade deals. On Wednesday, the minutes of the May 6-7 FOMC meeting will be released. Also, after Wednesday's close, Nvidia will report its quarterly earnings. On Thursday, weekly initial unemployment claims are expected to climb +3,000 to 230,000. Also, Q1 GDP is expected unchanged at -0.3% (q/q annualized). In addition, Apr pending home sales on Thursday are expected to fall -1.0% m/m. On Friday, Apr personal spending is expected up +0.2% m/m, and Apr personal income is expected up +0.3% m/m. Also, the Apr core PCE price index, the Fed's preferred inflation gauge, is expected to rise +0.1% m/m and +2.5% y/y. Finally, on Friday, the University of Michigan May consumer sentiment index is expected to be revised upward by +0.2 points to 51.0 from the previously reported 50.8. Q1 earnings reporting season is winding down. So far, more than 90% of companies in the S&P 500 have reported quarterly results, and 77% have beaten estimates, the highest percentage since Q2 of 2024. Earnings growth in Q1 is running at +13.1%, compared with just +6.6% expected before the start of the season. Full-year 2025 corporate profits for the S&P 500 are seen rising +9.4%, down from the forecast of +12.5% in early January. Overseas stock markets today are mixed. The Euro Stoxx 50 is up by +0.70%. China's Shanghai Composite fell to a 2-1/2 week low and closed down -0.18%. Japan's Nikkei Stock 225 closed up +0.51%. Interest Rates June 10-year T-notes (ZNM2 5) today are up by +8 ticks. The 10-year T-note yield is down -5.0 bp to 4.461%. June T-notes are climbing today on positive carryover from strength in 10-year German bunds. T-notes also have support after Bloomberg News reported that Japan's finance ministry sent a questionnaire to market participants regarding appropriate issuance amounts for government bonds, which could lead to stronger demand for US debt securities if Japan cuts its debt issuance. Weaker-than-expected US economic news today, including April capital goods new orders nondefense ex-aircraft and parts, and the March S&P CoreLogic composite-20 home price index, also gave T-notes a boost. Today's soaring stocks are reducing safe-haven demand for government debt and limiting gains in T-notes. Also, supply pressures are weighing on T-notes as the Treasury will auction $69 billion of 2-year T-notes later today as part of this week's slate of $211 billion of T-note and floating-rate note auctions. European government bond yields today are mixed. The 10-year German bund yield fell to a 2-1/2 week low of 2.513% and is down -1.8 bp at 2.543%. The 10-year UK gilt yield rebounded from a 2-week low of 4.602% and is up +0.4 bp to 4.684%. The Eurozone May economic confidence indicator rose +1.0 to 94.8, stronger than expectations of 94.1. Eurozone Apr new car registrations rose +1.3% y/y to 925,000 units, the first increase in four months. ECB Governing Council member Holzmann said the ECB moving interest rates "further south would be more risky than staying where we are and waiting until September." Swaps are discounting the chances at 97% for a -25 bp rate cut by the ECB at the June 5 policy meeting. US Stock Movers The Magnificent Seven stocks are rallying today and are lifting the overall market. Tesla (TSLA) is up more than +4%, and Nvidia (NVDA) is up more than +3%. Also, Alphabet (GOOGL) is up more than +2%. In addition, Meta Platforms (META), (AMZN), Apple (AAPL), and Microsoft (MSFT) are up more than +1%. Chip stocks are climbing today and supporting the broader market. Marvel Technology (MRVL) is up more than -5%, and Advanced Micro Devices (AMD), Microchip Technology (MCHP), ON Semiconductor (ON), and ARM Holdings Plc (ARM) are up more than +4%. Also, ASML Holding NV (ASML), KLA Corp (KLAC), and NXP Semiconductors NV (NXPI) are up more than +3%. In addition, Lam Research (LRCX), Analog Devices (ADI), Micron Technology (MU), Applied Materials (AMAT), GlobalFoundries (GFS), Broadcom (AVGO), and Qualcomm (QCOM), and Texas Instruments (TXN) are up more than +2%. Travel stocks and cruise line operators are moving higher today. United Airlines Holdings (UAL) is up more than +6%, and Carnival (CCL), Southwest Airlines (LUV), and Royal Caribbean Cruises Ltd (RCL) are up more than +5%. Also, Norwegian Cruise Line Holdings (NCLH) and Delta Air Lines (DAL) are up more than +4%, and Expedia Group (EXPE), Host Hotels and Resorts (HST) and Hilton Worldwide Holdings (HLT) are up more than +3%. Informatica (INFA) is up more than +5% after Salesforce Inc. agreed to buy the company for about $8 billion. Block Inc. (XYZ) is up more than +5% after BNP Paribas Exane upgraded the stock to outperform from neutral with a price target of $72. Vertiv Holdings (VRT) is up more than +4% after Evercore ISI raised its price target on the stock to $150 from $100. Gold mining stocks are sliding today, with the price of gold down more than -2%. As a result, Gold Fields Ltd (GFI) is down more than -3%, and Anglogold Ashanti Plc (AU) and Newmont (NEM) are down more than -1%. PDD Holdings (PDD) is down more than -15% to lead losers in the Nasdaq 100 after reporting Q1 adjusted operating margin declined to -19.1%, the lowest since Q1 of 2022. Fair Isaac (FICO) is down more than -7% to lead losers in the S&P 500 after FHFA Director Pulte said he is "still not happy with FICO" and his agency will be making some decisions on the rising cost of credit score reports in the next one to three weeks. AutoZone (AZO) is down more than -2% after reporting a Q3 gross margin of 52.7%, weaker than the consensus of 53.4%. Leidos Holdings (LDOS) is down more than -1% after Baird downgraded the stock to neutral from outperform, citing concerns about the bookings environment. National Storage Affiliates Trust (NSA) is down -0.54% after Morgan Stanley downgraded the stock to underweight from equal weight with a price target of $30. Earnings Reports (5/27/2025) American Vanguard Corp (AVD), AutoZone Inc (AZO), Box Inc (BOX), Champion Homes Inc (SKY), Critical Metals Corp (CRML), Golar LNG Ltd (GLNG), Golden Matrix Group Inc (GMGI), HEICO Corp (HEI), Okta Inc (OKTA), Semtech Corp (SMTC).
