The Tokyo Stock Exchange falls in the face of soaring US bond rates

2023-09-26 01:15:01

The Tokyo Stock Exchange fell slightly on Tuesday at the start of the session, sensitive to the surge in American bond yields and speculation about a possible next intervention by Japan on the foreign exchange market to support the yen. The flagship Nikkei index lost 0.82% to 32,411.42 points around 01:00 GMT and the broader Topix index lost 0.4% to 2,375.92 points.

Faced with the prospect of high key rates from the American Federal Reserve (Fed) over a long period, the yield on ten-year American government bonds rose to 4.54% on the bond market on Monday, its highest high level for almost 16 years.

The Japanese currency, for its part, reached a new low against the dollar on Monday since last October. The greenback is once again flirting with the 149 yen mark. The weakness of the yen is usually a positive factor for the Tokyo Stock Exchange, because it artificially inflates the international profits of Japanese companies once repatriated. This also makes Japanese stocks more attractive to foreign investors.

However, the depreciation of the yen has become so brutal again that the probability of Tokyo’s next intervention in the foreign exchange market seems increasingly high. The Japanese government had already intervened last fall to support the national currency when the dollar had crossed 150 yen.

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No respite for the yen

The yen did not really rise against the dollar, which was worth 148.84 yen around 01:00 GMT against 148.88 yen on Monday at 21:00 GMT. The Japanese currency, however, regained some ground against the euro, which was trading for 157.56 yen against 157.72 yen the day before. And the European currency was trading at 1.0585 dollars against 1.0593 dollars on Monday at 9:00 p.m. GMT.

The oil market was indecisive: around 00:40 GMT the barrel of WTI was perfectly balanced at $89.68 while the barrel of Brent from the North Sea lost 0.12% to $93.18.

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