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Japanese stocks rise for 3 days in a row, weaker yen tailwinds economic and earnings expectations – both domestic and foreign stocks are high
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The Tokyo stock market rose for three consecutive days. Excessive caution about the economy and corporate performance has receded due to slowing US inflation and deep-rooted expectations for a restart of the Chinese economy. The weakening of the yen exchange rate is also a tailwind, and export-related items such as electrical machinery, automobiles, and machinery are rising. Material stocks such as steel and non-ferrous metals were also high, and the rise in overseas economic sensitive industries such as trading company stocks was conspicuous. Domestic demand-related markets such as banks and services were generally strong, and buying spread to a wide range of stocks.
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Koichi Kurose Chief Strategist of Resona Asset Management
- Interest rates rose, the yen appreciated, and stock prices fell for about a month after the Bank of Japan revised its monetary easing policy in December last year, but today’s Nikkei Stock Average returned to the level before the policy revision.The BOJ has failed to break out of deflation three times in the past, and this is partly due to the view that it will not make any policy revisions for some time.
- There are also hopes that the slowdown in the global economy will ease.In China, although the number of new coronavirus infections has increased, there are no noticeable cases of severe cases, and the economic resumption of the country will have a large positive impact on the economy.
- As Chinese stocks are on holiday, there seems to be some moves to buy hedges in the Japanese stock market.
TSE 33 industries
| top rate of increase | Machinery, precision machines, metal products, banks |
| high drop rate | steel, shipping |
●Bond prices fall, long-term interest rates hover in the high 0.3% range – Buybacks of futures seem to be taking a break
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Bond markets fell. Futures were dominated by selling as the flow of buybacks after the Bank of Japan kept its policy unchanged showed a sense of a lull. Yields on newly issued 10-year government bonds hovered in the high 0.3% range, below the Bank of Japan’s allowable upper limit of 0.5%. The market was underpinned by the fact that the Bank of Japan conducted limit-price operations every business day and successfully passed liquidity supply auctions.
Keisuke Tsuruta, fixed income strategist at Mitsubishi UFJ Morgan Stanley Securities, pointed out that futures “seemed to be taking a break from the trend of rising prices due to short covering (repurchase of shorted positions) and the absence of sellers.” The super long-term zone also has a heavy topside ahead of the 40-year bond auction on the 26th, and the 20-year bond was likely to see a round of buying after last week’s auction.
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The Bank of Japan conducted a market operation at 10:10 a.m. to purchase unlimited 10-year government bonds at a yield of 0.50%.Notice. The BOJ also continued its limit price operations targeting the cheapest (cheapest futures delivery) issues.
Liquidity Supply Auction
- The target is a remaining term of over 1 year and up to 5 years.
- Maximum Yield Spread -0.001%, Average Yield Spread -0.004%
- The bidding ratio was 4.15 times, lower than the 5.39 times of the previous auction on November 22 for the same maturity.
- Mr. Tsuruta of Mitsubishi UFJ Morgan Stanley Securities
- Demand was centered on brands that were in short supply, and the result was a safe one.
Yen rebounds, yen interest rates do not continue to decline, lower than 130 yen level – BOJ policy revisions persist
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In the Tokyo foreign exchange market, the yen rebounded to the low 130 yen level to the dollar. The spread of interest rates between Japan and the United States has widened due to a decline in yen interest rates and a rise in US interest rates. Yen-buying became dominant as interest rates on the yen trended upward again amid deep-rooted expectations of a policy revision by the Bank of Japan.
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Takuya Kanda, head of research at Gaitame.com Research Institute, said, “Yesterday, the yen was sold because long-term interest rates in Japan were on the decline due to the joint collateral operation, but today long-term interest rates are on the verge of recovery, so let’s see that. The yen is depreciating,” he said. “The bottom line is that speculation about the BOJ policy revision since April has not disappeared,” he said.