[Tokyo, 24th, Archyde.com]–Russian troops attacked several cities in Ukraine on the 24th, according to high-ranking Russian government officials and the media. Prior to this, Russian President Vladimir Putin approved Russian troops for special military operations in Ukraine.
We asked market participants about the impact.
● It is necessary to reconsider the depreciation of the yen due to rising energy prices.
Russia may be bullish because it has talked with China on a mass supply instead of exporting natural gas to Germany. The United States has withdrawn from Afghanistan, so it may be necessary to show its strength in the conflict. Russia is a country possessing nuclear weapons, so if the United States and Russia collide seriously, it will be a big deal, so it will be a fight to avoid it.
The United States can supply energy to energy-deficient Europe. Russia can enjoy rising oil and gas prices. Both the United States and Russia are resource-rich countries and have economic advantages this time.
The situation is very delicate for Japan, which is a resource-poor country. Since it is not the time to follow the United States like the Cold War structure, the diplomacy of Prime Minister Fumio Kishida and Foreign Minister Yoshimasa Hayashi is being tested to see if Japan can protect its national interests with energy and economy in the future.
Since Japan is an energy and food importer, it is necessary to consider that it is not the time when the depreciation of the yen is all right in the midst of soaring prices. Oil and food prices are rising steadily. It is a difficult steering for Prime Minister Kishida.
● Crude oil prices, yen appreciation and stock depreciation have an impact at the same time
The impact on the global economy will be settled by rising energy prices. If economic sanctions on Russia are strengthened, it will affect Russia’s trade and economy, but since the scale of the Russian economy is not so large and the trade relationship with Japan is small, the impact on the Japanese economy is mainly due to the rise in energy prices. Will be through.
If the United States and other countries block access to the International Banking Communications Association (SWIFT), which is an international payment network system, as a means of sanctions against Russia, credits to Russian banks may be squeezed, but the impact is large in Europe. Let’s go.
The impact on the Japanese economy will be energy shortages and rising prices of natural gas, crude oil and wheat. In addition, risk aversion will occur at the same time as the yen strengthens and stock prices fall.
● Watch the impact on the US monetary policy normalization process
If the problems of Russia and Ukraine are prolonged, the most important thing to pay attention to is what will happen to the Fed’s monetary policy normalization process. At this point, there is no atmosphere of making policy changes. Rather, it seems that there are many views that the direction of monetary tightening will not change as inflation continues to rise as resource prices do not converge due to rising geopolitical risks.
However, with the global stock market declining sharply, the next thing to worry about is the US economy. In the United States, more than 30% of household financial assets occupy stocks, and if stock prices continue to fall at this rate, there is a risk that personal consumption and daily economic indicators will deteriorate. If that happens, it’s unclear if the Fed will be able to continue discussions on rate hikes and balance sheet contractions. If the Fed’s monetary policy management changes, the dollar may weaken and the yen may strengthen.
The risk-off mood is strongest at the timing of the military clash, but the dollar is currently reluctant to fall at the mid-114 yen level. The dollar may continue to move from the middle of 114 yen to the middle of 115 yen for about a week.
In the short term, it is unlikely that the dollar will rise to the 116 yen level, but if the dollar continues to fall around the middle of 114 yen, the dollar / yen pair will be able to try the year-to-date highs in the April-June period. Is likely to remain.
● Soaring crude oil is a risk for Japanese stocks
The Nikkei average was up to 26,000 yen, but it has collapsed due to the further tightening of the situation in Ukraine. Although the market had factored in some military activity in the eastern part of Ukraine, which is virtually dominated by Russia, it seems that the full-scale invasion was premature.
When full-scale battles begin in the future, crude oil prices are expected to remain at a level above $ 100 a barrel. Soaring crude oil prices are, of course, a risk for Japanese stocks. Inflationary pressures are likely to increase if international food prices accelerate as oil prices rise. Japan (Bank of Japan) has originally restrained the rise in interest rates, so there is no way to do it.
The news is confusing over the situation in Ukraine, and it is often unknown at this point. It’s best to assume that machine trading, such as algorithms, has overreacted to headlines and sold futures.
● To incorporate stagflation risk
Due to the tightening situation in Ukraine, we have reached a stage where we need to incorporate the risk of stagflation. Not only are there concerns about an economic slowdown, but prices such as crude oil and semiconductors may be under widespread upward pressure.
The impact on the bond market is difficult on both sides, but the focus is on monetary policy. This has made it much harder for the ECB (European Central Bank) and the Bank of Japan to tighten monetary policy, but the Fed (Federal Reserve Board) is forced to steer hard due to the rapid inflation in the United States.
Yen bonds are likely to have lower interest rates. US long-term bonds and ultra-long-term bonds are also expected to be under downward pressure, incorporating the risk of a recession rather than concerns about rate hikes.
The macro-policy response will be centered on public finance, but it is not easy to expand because spending has been increased by responding to corona. Isn’t monetary policy devoted to support?