TOKYO – Tokyo’s stock market witnessed a notable increase on Monday, marking the beginning of a week filled with significant U.S. economic reports. Meanwhile, the stock markets in Sydney and Hong Kong remained relatively stable.
The uptick in Tokyo shares can be attributed to a reduction in inflation-related concerns, leading investors to believe that the Federal Reserve is less likely to implement another interest rate hike in the near future.
Japan’s benchmark Nikkei 225 index surged by 2.3% during afternoon trading, reaching 69,901.70 points, with earlier trading even pushing it above the 70,000-point threshold for the first time in three months.
In Australia, the S&P/ASX 200 index remained almost unchanged, inching up by less than 0.1% to 8,686.40 points, while Hong Kong’s Hang Seng index saw negligible movement, closing at 23,976.15 points.
It is worth noting that trading was halted in Shanghai and South Korea due to national holidays.
Investor enthusiasm was particularly pronounced in sectors associated with artificial intelligence, leading to significant gains for several companies. Tokyo Electron experienced a 5.2% increase in its stock price, while the technology investment titan SoftBank Group saw its shares rise by 3.1%. Additionally, Taiwan Semiconductor Manufacturing Co. (TSMC) climbed by 3%.
The recent performance of U.S. stocks has also been noteworthy, as they finished the previous week near all-time highs. The latest job market report, which showed a slower than expected addition of jobs, contributed to easing inflation concerns. The S&P 500 index climbed by 0.7%, coming within 1% of its record high set in August, while the Dow Jones Industrial Average and Nasdaq composite increased by 0.5% and 1.2%, respectively.
According to the U.S. government, employers added 29,000 jobs to their payrolls last month, a figure that fell short of economists’ expectations and represented a slowdown from the 133,000 new jobs added in August. This data has led markets to speculate that the Federal Reserve may refrain from raising its benchmark interest rate further, providing some relief to investors.
The shift in expectations regarding an October interest rate hike has also helped stabilize the bond market. The yield on the 10-year Treasury bond dipped below 5.17% at one point, down from a peak of around 5.35% on Thursday, which had marked its highest levels in nearly two decades.
By the end of the day, the yield on the 10-year Treasury bounced back to 5.28%, remaining more than 0.10 percentage points above its lowest mark for the day. This fluctuation contributed to U.S. stocks paring some of their earlier gains.
In the energy sector, benchmark U.S. crude oil prices fell by 1.55% to $89.70 per barrel, while Brent crude, the international standard, decreased by 0.99% to $101.24. These price movements reflect ongoing uncertainties regarding the potential impact of the conflict with Iran on the global oil market.
In Asian currency trading on Monday, the U.S. dollar declined to 157.76 Japanese yen from 157.83 yen the previous day. The euro was priced at $1.1189, down from $1.1257.
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Yuri Kageyama is on Threads: https://www.threads.com/@yurikageyama
