Latest news with #Nikkei225StockAverage
The Star
3 days ago
- Business
- The Star
Japan index hits record high on earnings boost, other Asian markets ease
A screen displays the Nikkei 225 Stock Average figure at the Tokyo Stock Exchange (TSE), operated by Japan Exchange Group Inc. (JPX), in Tokyo, Japan. - Photographer: Akio Kon/Bloomberg SINGAPORE: Japanese shares surged on Friday after positive earnings reports and expectations the U.S. would remove overlapping tariffs on the country's goods, while shares were down in other Asian markets after a late retreat on Wall Street during the previous session. MSCI's broadest index of Asia-Pacific shares outside Japan slipped 0.4% with Hong Kong's market leading declines, after U.S. stocks ended the previous session with mild losses after nearing a one-week high. Meanwhile, Japanese stocks soared, with the Nikkei 225 up 2% and the Topix index hitting a fresh record, trading above 3,000 for the first time. Shares in SoftBank Group rallied as much as 11% after the technology investor reported that it swung back to profit in the first quarter. Sony Group gained 6%, adding to its earnings-fuelled 4.1% advance from Thursday. U.S. stock futures, the S&P 500 e-minis, were up 0.3%, while Nasdaq futures rose 0.4%, on track to extend gains into a third day. The rally for stocks comes "against the backdrop of an emerging titanic dovish pivot at the Federal Reserve," said Tony Sycamore, market analyst at IG in Sydney. U.S. President Donald Trump said on Thursday he would nominate Council of Economic Advisers Chairman Stephen Miran for the vacant seat at the Federal Reserve while the White House seeks a permanent addition to the central bank's governing board and continues its search for a new Fed chair. The market is also digesting a Bloomberg News report that Fed Governor Christopher Waller is the top candidate to replace Chair Jerome Powell, whose term ends on May 15, 2026. The yield on benchmark 10-year Treasury notes rose to 4.2461%, up from the U.S. close of 4.244% on Thursday, after weak demand at an auction of 30-year bonds, the latest in a string of lacklustre sales this week. The rally for Japanese stocks follows a mixed bag of earnings reports for the country's biggest exporters, as some companies like Toyota Motor slashed their profit forecasts, while Sony and Honda said the impact would be less than feared. As the effective date of recent U.S. trade duties arrived, Tokyo's trade negotiator said the U.S. government on Thursday promised it would fine-tune some of its overlapping tariffs on Japanese goods to avoid the duties being paid on some products twice. Hong Kong's Hang Seng Index fell 0.6%, with technology shares leading declines and China's blue-chip CSI 300 index slipped 0.1%. Australian stocks were 0.2% lower. The dollar rose 0.1% against the yen to 147.27. Japanese household spending data released Friday, which provides clues to consumption and wage trends that the Bank of Japan is monitoring to determine the timing of its next rate hike, rose at a slower-than-anticipated 1.3%. The European single currency was flat at $1.1669, having gained 2.23% in a month, while the dollar index, which tracks the greenback against a basket of currencies of other major trading partners, was up 0.2% at 98.124. In commodity markets, Brent futures were unchanged at $66.45, while U.S. crude futures were little changed at $63.81 a barrel. Gold was 0.4% lower, with bullion last trading at $3391.157 per ounce. (Reporting by Gregor Stuart Hunter in Singapore; Editing by Jamie Freed)
Mint
24-07-2025
- Business
- Mint
Japan's Topix Sets Record High as Trump Deals Ease Tariff Fears
Japan's Topix stock index rose above last summer's record to close at a fresh peak as hopes of more US tariff deals brightened the outlook for global trade and economic growth. The equity rally in Japan comes as gauges worldwide have notched all-time highs on expectations that President Donald Trump's levies won't hurt businesses as much as feared. A lower-than-expected 15% levy on Japanese exports to the US has fueled optimism that Trump might offer concessions to other trading partners, including the European Union. The Topix, a broad-based measure that tracks over 2,000 companies, rose 1.7% to close at 2,977.55 in Tokyo, above its previous all-time high level of 2,929.17, set on July 11, 2024. The blue-chip Nikkei 225 Stock Average also rose 1.6% to 41,826.34, within a whisker of its record. Japan's benchmarks have rebounded from lows struck in early April following the announcement of Trump's 'Liberation Day' tariffs, largely on anticipation of a US-Japan trade deal. Trump announced the long-awaited truce Wednesday, sending the Topix and Nikkei climbing more than 3%. They extended gains Thursday. 'The risk-on sentiment has a solid reason behind it,' said Anna Wu, a cross-asset investment specialist at VanEck in Sydney. 'Japan's getting a lower-than-feared tariff rate from the US, which will be a net positive for economic growth, and that's adding fuel to equities,' she said. The trade deal has also given the Bank of Japan 'breathing room' to reassess the pace of future interest rate hikes, Wu said. Banking shares were among the Topix's biggest gainers Wednesday, boosted by expectations of a near-term hike. Exporters like electronics makers were also strong. Japan's stock market has been in a broad upswing over the last three years, supported by the nation's emergence from deflation, and corporate governance reforms. Inflows from foreign investors have helped the rally in recent months, with global funds turning net purchasers of cash Japanese equities for the past 15 consecutive weeks. Demand was boosted by a 'Sell America' strategy in the wake of Trump's April tariff announcement, with Japanese firms' moves toward better governance and juicier shareholder returns also helping. 'Japan remains a compelling value play,' said Christy Tan, an investment strategist at Franklin Templeton Institute, in a note. 'Diversification motives and relative value' drove US and European interest in Japanese shares in the first half of 2025, she added. The Topix milestone marks a recovery from a widespread rout last August, when the BOJ's unexpected rate hike triggered a sharp appreciation in the yen and sparked selling in stocks. Just a month earlier, a historically weak yen and the global tech rally had lifted both benchmarks to levels not seen since 1989. This rally could be short-lived, though, amid lingering concerns over Japan's domestic politics, cautioned VanEck's Wu. Prime Minister Shigeru Ishiba has denied local media reports he's stepping down after his party's loss of an upper house majority, while uncertainty around the nation's fiscal policy remains. 'Japan's mounting fiscal stress is not to be overlooked,' said Wu. Government bond yields have risen to historic highs this week on worries that Japan's newly-weakened ruling coalition might have to concede to opposition parties' calls for tax cuts. 'If we get multiple rounds of weaker-than-expected bond sales, then it introduces fresh complexity into the equity market,' said Wu. 'For global investors looking at Japan, it's stability and predictability that matter.' This article was generated from an automated news agency feed without modifications to text.
Mint
19-06-2025
- Business
- Mint
Japan's Stocks Still Under Shadow of BOJ Unwinding Bond Holdings
The Bank of Japan is fine-tuning its pullback from the bond market but this mustn't obscure the fact that quantitative tightening is well underway and likely to cause instability in some stocks. The potential impact of quantitative tightening may cast a shadow on the Nikkei 225 Stock Average's chances of climbing further after hitting four-month highs this week. The blue-chip index is skewed toward growth stocks such as Fast Retailing Co., which owns the Uniqlo casual clothing chain, and chip-related firms Advantest Corp. and Tokyo Electron Ltd. On top of growth stocks, which are known to be susceptible to higher bond yields, large-cap shares are vulnerable. The negative correlation of these shares with bond yields is increasing, said Akemi Hatano, chief quantitative analyst at SBI Securities Co. This highlights the need for vigilance among investors even after the BOJ this week announced a plan to reduce the pace of tapering in its bond purchases. That move was seen as stabilizing the market after recent sharp moves higher in Japanese government bond yields that rippled across global debt markets. 'Rising bond volatility will have a big impact on how investors select stocks,' said Hatano. Large and blue-chip shares are vulnerable when it spikes because 'they are the most convenient to reduce risks when investors want to cut their risk exposure in a short period of time,' she said. The BOJ started unwinding its massive bond buying last August but the pace has been slow. Its holdings fell ¥16.7 trillion over the past year. That's a drop of less than 3%, which compares with a decline of about 10% in Treasuries on the Federal Reserve's balance sheet in its first year of quantitative tightening. The real impact of the BOJ's will still be felt longer-term, said Masao Muraki, a senior analyst at SMBC Nikko Securities Inc. 'We now expect QT to enter a phase of reducing excess liquidity in the banking sector, and this will trigger fiercer competition for deposits, and market instability,' he said. To be sure, fears that balance sheet reductions will hugely unsettle Japan's markets may be overblown. One could argue that US stocks have remained resilient overall, despite the Fed's unwinding of its holdings that began in 2022. Even so, the big selloff in Japanese bonds last month was a wake-up call for equity investors on the risk of rising yields. 'Asset classes that have benefited from quantitative easing such as stocks could be affected by quantitative tightening,' said Muraki. This article was generated from an automated news agency feed without modifications to text.
AllAfrica
29-05-2025
- Business
- AllAfrica
Japan's bond spasm hits a world without safe havens
TOKYO – Japan doesn't tend to interest global investors very much — until something here goes really, really wrong. Exhibit A: Japan's US$7.8 trillion government bond market, which is suddenly sending sizable shockwaves around the globe. Ten days ago, Japanese government bonds (JGBs) were the usual snooze fest with ultra-low yields, sluggish liquidity flows and trading hours when most masters of the investment universe are switched off. Yet a disastrous May 20 bond auction quickly thrust Japanese debt into the center of the global financial discourse. And for that, investors have Donald Trump and his tariffs to thank. Japan is starting to wobble much like the US. The world's No 1 and No 3 economies are fending off 'bond vigilantes' at a moment when the euro's share of foreign exchange reserves is just 20%, suggesting global safe havens are increasingly hard to find. Investors can't seem to decide which major economy is riskiest. The US and all things Trump? Japan and its lost-decade baggage and current inflation troubles? Or China, with its rising deflation and persistent property crisis? Perceptions on all three tend to ping-pong back and forth on any given day. The plot thickened further during US hours on Wednesday (May 28) when the US Court of International Trade ruled that the Trump administration lacks the authority to impose sweeping tariffs. At least for now, it could bring Trump's trade war to a screeching halt (Trump is already appealing the ruling). Might Trump just try to ignore the ruling? Also, Trump has been raging this week about the rise of the 'TACO trade' on Wall Street, a Financial Times-coined acronym meaning 'Trump Always Chickens Out.' Trump seems aggrieved, too, that China hasn't stepped forward to offer loads of trade concessions since he cut tariffs to 30% from 145%. News that the US will begin revoking visas for Chinese students suggests the trade war isn't going away while hopes for a 'grand bargain' trade deal wane. At the moment, it's Japan's turn in global headlines. Its dubious status as the most indebted developed nation is a surprise to no one. Tokyo's 260% debt-to-GDP ratio is part of investors' thought processes when buying JGBs. Or, for that matter, Nikkei 225 Stock Average stocks. For two years now, the Bank of Japan has been reducing its vast holdings of government debt, part of efforts to normalize the rate environment. Since 1999, the BOJ has held the benchmark rate at, or near, zero. The policy was necessitated by the same reason Japan's national debt is so titanically large: fallout from the 1990s bad-loan debacle. All that debt issuance helped Japan grow modestly year after year. And the BOJ's aggressive JGB purchases — it holds well over 50% of all outstanding securities— helped maintain calm in the market. Until now, it's kept JGB yields from getting out of line. The BOJ's tapering policy was going well enough. Since July 2024, Governor Kazuo Ueda has been cutting purchases by 400 billion yen ($2.8 billion) each quarter. The BOJ even managed to hike official rates to 0.5%, a 17-year high. Then Trump 2.0 arrived to launch a trade war with every economy of scale. The tariffs triggered near-unprecedented turmoil first in US Treasury securities and then in debt markets everywhere. Including Japan, where yields have spiked in headline-grabbing ways. The volatility culminated last week with a 20-year bond auction that absolutely flopped. The typically routine sale of $6.9 billion issues maturing in 2045 drew the least interest since 2012. The 'tail,' the gap between the average and lowest-accepted prices, was the worse since 1987. Suddenly, #JGBCrash was trending in Asian cyberspace. It was Tokyo returning the favor, sending shockwaves back toward the US. Earlier this week, US Treasury Secretary Scott Bessent said worries about Japan were indeed pushing US yields higher. Some argue Japan worries are much ado about nothing. For example, Japanese Finance Minister Katsunobu Kato's team managed to tame markets by signaling a shift in bond issuance toward shorter-dated securities. It helps explain why a less-than-stellar 40-year bond sale on Wednesday didn't slam world markets. Markets are betting that, for now, Tokyo is on top of things. 'We maintain our long-standing view that the challenges in the JGB market are technical rather than structural, says Masahiko Loo, senior strategist at State Street Global Advisors. 'These issues are largely addressable through adjustments in issuance volume or composition.' Loo adds that 'we believe the concern on loss of control over the super-long end is overblown. Around 90% of JGBs are domestically held, and the 'don't fight the BOJ/Ministry of Finance' mantra remains a powerful anchor. Any perceived supply-demand imbalance is more a matter of timing mismatches, which is a technical dislocation rather than a fundamental flaw. We expect these imbalances to be resolved as early as the third quarter.' The MOF's announcement that it might reduce the size of bond issues, Loo says, 'reinforces our view.' Yet risks abound. In a note to clients, Macquarie Bank analysts warn that rising JGB yields could be a 'trigger point' that catalyzes a wave of capital repatriation with Japanese investors pulling funds from dollar assets. Albert Edwards, global strategist at Societe Generale, goes further, arguing a Japanese yield surge could 'trigger a global financial market Armageddon.' Goldman Sachs analysts think the JGB market is a 'canary in the global duration coal mine.' Realizing that, and not wanting to trigger a global meltdown, Tokyo may reduce issuance of super-long JGBs in July, easing market concerns, says Katsutoshi Inadome, strategist at Sumitomo Mitsui Trust Asset Management. However, he adds, 'this offers only temporary relief and won't lead to a decline in Japan's debt balance. With the MOF likely doing its part, politicians now need to make efforts to avoid increasing debt.' The timing of all this could scarcely be worse. Carlos Casanova, economist at Union Bancaire Privée, says that the market has been pricing in the possibility of slower growth and higher inflation. 'Compounded with technical factors in a notably illiquid market,' he says, 'this has exerted upside risks on JGBs, with the 10-year bond picking up to 1.50% and the 30-year soaring to 3.16%. Yet where JGB yields go could have major implications globally. George Saravelos, head of FX research at Deutsche Bank, called the recent divergence between US yields and the yen exchange rate the 'single most important market indicator of accelerating US fiscal risks' because it shows foreign buyers are jittery about the US Treasury market. 'The Japanese yen is strengthening even as US yields are rising,' Saravelos says. 'We consider this as evidence that foreign participation in the US Treasury market is declining.' All this has the BOJ throttling back on rate hikes. Over the last two years, Governor Ueda's team managed to boost the benchmark to the highest since 2008. Now, fears that Japan is skirting stagflation are getting in the way. GDP shrank 0.7% in the first quarter, while consumer price inflation is running at a 3.6% rate. That's nearly double the BOJ's 2% target. Recent market turmoil is 'adding to the Bank of Japan's challenge of balancing price pressures against growth headwinds from US tariffs,' UBS analysts write in a report. UBS thinks the BOJ's next tightening move won't come until 2026. One reason for the BOJ is treading so carefully is indications that regular levels of market liquidity are becoming sporadic. 'If the BOJ makes no changes to its purchase reduction plans despite the survey showing a decline in market functioning, it may send the wrong message that it intends to continue reducing purchases without taking market conditions into account,' says Naoya Hasegawa, chief bond strategist at Okasan Securities. The direction of US Federal Reserve policy is its own mystery. A summary of the May 6-7 meeting of the Federal Open Market Committee suggests the central bank has some misgivings about the volatility in US fiscal and trade policies. 'Participants agreed that uncertainty about the economic outlook had increased further, making it appropriate to take a cautious approach until the net economic effects of the array of changes to government policies become clearer,' the minutes said. 'Participants noted that the Committee might face difficult tradeoffs if inflation proves to be more persistent while the outlooks for growth and employment weaken.' Yet the Fed's own economic forecast 'puts the economy squarely in stagflationary territory,' says Omair Sharif, president of advisory Inflation Insights. Not surprisingly, a new JPMorgan Chase survey flags growing fears about the stability of the $29 trillion US Treasury market. Top-line worries include a nearly $37 trillion national debt, Trump's trade war and a chaotic legislative environment on Capitol Hill. The bottom line, as Leah Traub, a portfolio manager at Lord Abbett & Co tells Bloomberg, is that 'demand for longer-term securities is diminishing at the same time as supply is growing.' This means that the typical US safe haven of choice is losing credibility as Japan wobbles, too. If ever there were a moment for China to step up and try to fill this growing vacuum, it's now. Follow William Pesek on X at @WilliamPesek
The Star
14-05-2025
- Business
- The Star
Japan stocks head for longest rally since 2009
The benchmark gauge rose as much as 1.9% to 2,794.96 in Tokyo, heading for a 13th straight day of gains. — Bloomberg TOKYO: Japanese stocks extend their climb, putting the Topix on track for its longest winning streak in 16 years, after the United States and China agreed to de-escalate tariffs, boosting risk-on sentiment and sending the yen lower. The benchmark gauge rose as much as 1.9% to 2,794.96 in Tokyo, heading for a 13th straight day of gains, the most since August 2009. The blue-chip Nikkei 225 Stock Average was up as much as 2.3% to 3,8494.06. The climb comes after the United States slashed duties on Chinese products to 30% from 145% for a 90-day period, while Beijing dropped its levy on most goods to 10%, following two days of high-stakes talks in Switzerland. The announcement came after Japan's stock market closed on Monday. 'The risk-off sentiment that had built up is easing, and it looks like the buying trend will continue for a while longer,' said Naoki Fujiwara, a senior fund manager at Shinkin Asset Management. Exporters like Toyota Motor Corp and Nintendo Co contributed most to the Topix's rise, with banks also strong. Firms that make a large chunk of revenue in China, like Yaskawa Electric Corp and Fanuc Corp, were among the Nikkei's top performers. Investors are still waiting for a trade agreement between Japan and the United States. Prime Minister Shigeru Ishiba intends to reach an agreement with the United States in July, according to Asahi. The US-China agreement makes it 'more likely there is a deal between Japan and the United States,' said Kelvin Leung, a portfolio manager at Robeco Hong Kong. 'However, I'm more worried about the fast optimism in Japan,' he said. 'Judging by the index level, expectations are running ahead.' The Nikkei 225 has climbed more than 5% through Monday since US President Donald Trump announced so-called reciprocal tariffs on April 2. — Bloomberg
