This, apparently, is a favoured way to short Japanese equities, and trading in said ETF, the Nikkei Double Inverse, has been particularly brisk of late. Meaning a lot of speculative money was caught on the hop on Wednesday…
Nope not in that direction:
Up towards 18,000 in fact from it’s current bear-wrought 12,500 or so. That’s Nomura’s bet at least and good luck to them. A taste: Read more
The Nikkei was up 4.9 per cent at 13514 during the official Tokyo session, rising towards 13700 during after hours trading; the Topix was up 5.2 per cent and the yen 1.1 per cent weaker at Y98.6. Sigh… Read more
(With Macro man getting the credit for the pic on the right) Read more
That’s the yen on the left hitting Y99.69 at pixel and the Nikkei, right, having lost nearly half of its speedy 2013 gains since May 22 (click to enlarge):
A disgusted Shinzo Abe appears after the break…
That’s the Nikkei off 5 per cent on Thursday morning, its biggest fall since last week’s 7.3 per cent hit:
Both the Nikkei and the boader Topix have lost around 13 per cent in local currency terms since hitting peaks last week: Read more
Nomura’s Richard Koo put out a note on Tuesday reacting to the rise in JGB yields since the Bank of Japan went into QE overdrive that seems worthy of some attention.
He thinks the Bank of Japan, in reaction to yields heading upwards, needs to declare that it will not tolerate overshooting of inflation. They’ll need to rein themselves in:
What can the BOJ do? To begin with, the Bank and the government could make it clear that they are targeting a 2% rate of inflation but at the same time, they will not under any condition tolerate a significant overshooting of that rate.
Blame Bernanke, China or the BoJ but this Nikkei rout has apparently been led by the little guys. From the FT:
Over the past few weeks, individual investors’ share of trading had risen steadily, to a record 35 per cent last week. Brokers say their share was almost certainly higher over the past few days, judging by huge volumes in popular stocks such as Fast Retailing, owner of Uniqlo, and Mitsubishi Motors [...]
The scale of the fall [says says Stefan Worrall, director of equity sales at Credit Suisse in Tokyo], “just shows the extent to which this market has become abducted by retail.”
First the hedgies, now the little guys: Read more
The Nikkei 225 was clearly over-cooked. But just how over-cooked, we found out on Thursday…
Yes, the rally in Japanese equities has caught many an eye. There’s been hardly a step backwards in six months.
Yet prices seem to be accelerating from here. With the Nikkei 225 already up 1.6 per cent on Wednesday, closing at 15,627. Here is the after-hours action, courtesy of the CME: Read more
Nikkei 15,000 comes courtesy of a weak yen and increasing earnings expectations which carry some potentially elevated valuations with them. If you need any evidence of how sensitive the Nikkei has become to the yen’s rise, here’s a chart to ease your suffering:
But there are other things at work here. Read more
Intervention props and promises were powering global risk assets in early European trading, the FT reports. The Nikkei 225 in Tokyo jumped 2.3 per cent as investors welcomed the Bank of Japan’s unexpected move to bolster its asset purchasing programme by another Y10tn. Financials in particular liked the idea of the central bank supporting the market. And the euro leapt in early Asian action, even after eurozone officials called off an emergency meeting of finance ministers to approve a €130bn bail-out for Greece. Traders latched on to comments from Zhou Xiaochuan, China’s central bank governor, who reiterated a previous pledge from premier Wen Jiabao that Beijing was prepared to help Europe tackle its debt difficulties. This has caused the single currency to rally 0.3 per cent to $1.3162, a move that ignited bullish sentiment across the risk asset spectrum. The FTSE All-World equity index was up 0.6 per cent and commodities were mostly in demand. Copper was adding 1 per cent to $3.85 a pound and Brent crude was higher by 0.6 per cent to $118.01 a barrel. Europe’s FTSE Eurofirst 300 opened higher by 0.4 per cent.
Asian equities fell further on Tuesday, after US markets closed lower overnight. The Asian fall extends the worst losses since 2008, says Bloomberg. The FTSE All World Asia Pacific excluding Japan index was down 5.2 per cent by mid-morning in Hong Kong, entering bear market territory having now dropped more than 20 per cent since its peak in May, the FT says. The Hang Seng fell more than 7 per cent, the Nikkei 225 was down 4.6 per cent in morning trade, with the S&P/ASX 200 recording a similar fall. As on Monday, Korea’s Kospi which suffered the worst rout, falling more than 9 per cent. The WSJ says it is the country’s close ties to the US economy and reliance on European wholesale funding that has pulled the Korean market so low. The yen was the only Asian currency to rise, exceeding Y77 per dollar which brings it close to its level prior to last week’s BoJ intervention. Trade in Treasuries and US stocks surged on Monday, the FT reports.
Asian stocks fell on Monday after S&P downgraded the US credit rating, Bloomberg reports, extending the worst global slump since the bull market began in 2009. There were signs that downgrade had already been priced in, however, after a solif week of losses in many equities markets. Gold again hit new records, heading close to $1,700 an ounce, and the Swiss franc also climbed against the dollar. By late morning in Hong Kong, the FTSE All-World Asia Pacific index excluding Japan was down 2.4 per cent, having lost 8.5 per cent last week in a global market rout, the FT reports. The Hang Seng was 4.2 per cent lower at 20,064.45, while in Tokyo the Nikkei 225 was down 1.3 per cent at 9,178.03 and in Sydney the S&P/ASX 200 fell 1.9 per cent to 4,027.70. On the Chinese mainland, the Shanghai Composite tumbled 4.8 per cent to 2,500.03. However Treasuries were little affected in Asian trading, with US 10-year bond yields rising 2 basis points from Friday to 2.58 per cent. Crude oil futures fell 3.3 per cent in New York. Several bankers told the FT that the US debt ceiling brinkmanship in July had already spurred much of the preparation for such an event.
In a word: muted.
The lack of progress on US debt ceiling talks over the weekend hasn’t caused a spiral of chaos. Read more
Interesting times in the Japanese stock market – not to mention the shell-shocked country as a whole – as the key Nikkei and Topix gauges ended the holiday-shortened week up a respectable 3.3 per cent and 3.6 per cent respectively.
The newfound interest in Japanese stocks could well recede on Friday’s news of fresh problems at the stricken Fukushima nuclear power plant, as authorities admitted the No. 3 reactor could be cracked and leaking radiation. Read more
The futures market is pointing toward another gut-wrenching sell off in Tokyo on Thursday.
Price via IG Index. Read more
European bourses are breaking a five-day losing streak after the Tokyo stock market rallied nearly 6 per cent in the belief that recent selling had been overdone, the FT reports in its rolling global market overview. “Bargain hunters” have moved back into many riskier assets following a two-session tumble on Japanese nuclear fallout fears that had seen global equities shed about $1,600bn. See also FT Alphaville on Japan’s Wednesday bounce, and for a look at who’s been selling Japanese stocks.
A plea for calm, from Atsushi Saito, president of the Tokyo Stock Exchange:
To All Investors and Trading Participants Read more
Japan has defied investor logic even more than usual in the past few days.
Even as the sense of crisis deepened around Japan’s stricken Fukushima nuclear plant, with reports of a fresh fire and radioactive leaks, stocks bounced back some on Wednesday, with the Nikkei 225 Stock Average closing up nearly 6 per cent. Read more
In addition to being big Japanese government-bond buyers, Japan’s megabanks are also (wait for it) heavily invested in equities. Though not as much as they used to be.
There’s a slightly ironic backstory here that has to do with Japan’s very long banking crisis. During the bubble years, Japanese banks rushed to invest in the country’s booming stock market — often booking any share price gains as ‘unrealised gains’ or ‘hidden reserves’ that fed into their regulatory capital. Once the market crashed, the banks posted huge equity losses. The financials subsequently cut down on their share holdings (relatively) and Japan’s regulators reacted with some new rules. Read more
Markets are enduring a turbulent session as the worsening nuclear crisis in Japan sees traders frantically dump riskier assets and push funds into the haven of Treasuries and Bunds, the FT reports in its rolling global markets overview. The FTSE All-World index is down 1.7 per cent and Tokyo’s Nikkei 225 crashed 11 per cent, as reported by FT Alphaville. S&P 500 futures are down 1.9 per cent, suggesting Wall Street will open at its lowest level in three months. the FTSE Eurofirst 300 is down 1.7 per cent and the FTSE 100 has lost 1.6 per cent, with miners and technology hardware stocks down across the region.
As we noted earlier on Friday, there’s nothing quite like a killer earthquake and tsunami to boost a currency — at least, that seems to be the case in Japan where the yen not only recovered after dipping in the wake of Friday’s 8.9-magnitude earthquake and massive tsunami, but went on to rack up some fairly astonishing gains.
In most countries, a natural disaster of that scale would drive a currency down, as seen in New Zealand, where the earthquake that devastated central Christchurch drove down the kiwi and prompted the central bank to cut rates. Read more
Asian stock markets were softer as investors locked in profits on commodity shares’ recent sharp gains, with sentiment also darkened by an uptick in US jobless claims, reports the FT’s global market overview. The benchmark S&P 500 was off 0.2 per cent, led lower by growth-linked materials shares, and the price of oil tumbled in late trading despite a weakening US dollar. The MSCI Asia Pacific index slipped 0.1 per cent while Japan’s Nikkei 225 retreated 0.4 per cent after hitting an eight-month high. Australia’s S&P/ASX 200 was off 0.1 per cent, South Korea’s Kospi Composite 0.4 per cent lower and New Zealand’s NZX-50 down 0.2 per cent. The Hang Seng index lost 0.2 per cent and the Shanghai Composite index dropped 0.7 per cent. In the currency markets, the euro was lower against major currencies due to profit-taking after a rally in overseas markets – it was up 2 cents versus the dollar – propelled by hawkish comments on inflation from European Central Bank president Jean-Claude Trichet. Against the US dollar the euro was trading at $1.3333 from $1.3364 late in New York and it was at Y110.32 against the yen, from Y110.67. The yen was fetching Y82.76 per dollar, versus Y82.80.
An easing of tensions between North and South Korea and supportive comments on the eurozone from the Chinese government emboldened bulls, reports the FT’s global market overview. The FTSE All-World equity index was higher by 0.8 per cent and copper was leading commodities as the red metal hits a fresh record. The euro was firmer, though delve deeper and it is clear Chinese authorities are less sure of the prospects for the currency bloc. Nevertheless, for now, the market mood is upbeat, and the S&P 500 on Wall Street was higher by 0.5 per cent to a fresh 27-month peak, gaining support from more M&A activity and after Adobe beat earnings forecasts. The FTSE Asia Pacific index added 1.1 per cent, and South Korea’s Kospi index gained 0.8 per cent as the tensions on the Korean peninsula eased. Japan’s Nikkei 225 rose 1.5 per cent, after the Bank of Japan left its ultra-loose monetary policy unchanged, as widely expected. China’s Shanghai Composite added 1.8 per cent, as funds picked up property stocks that have had a difficult time of late on worries over Beijing’s drive to cool speculative activities. Hong Kong’s Hang Seng advanced 1.6 per cent, with energy stocks in good form as the winter draws in. A better day for broader risk appetite was initially taking its toll on “safe” sovereign bonds, though losses were minimal. The yield on the US 10-year note is down 1 basis point to 3.33 per cent
Risky assets took a step backwards, led by a decline in the euro after Moody’s said it may downgrade Spain’s credit rating and pushed along by still-rising US interest rates, reports the FT’s global market overview. Moody’s said it was putting Spain’s Aa1 rating on review for possible downgrade, citing Madrid’s large debt and its funding requirements in 2011. But a batch of positive US economic data had seen investors buying the dollar and giving a small lift to Treasury yields, all of which weigh on the euro, which was down 0.8 per cent at $1.3273. Treasury yields were also higher, escaping the orbit of haven flows and real money buyers attracted by rising rates. The benchmark 10-year yield was up 4 basis points to 3.516, its highest in seven months. The 30-year was nearing an eight-month high at 4.494 per cent, up 7 basis points. The FTSE Asia Pacific index fell 0.9 per cent after hitting its highest intraday level in 29 months on Tuesday. Sentiment in Asia was further damped by the Bank of Japan’s Tankan survey for December showing that confidence among big manufacturers fell for the first time in seven quarters. Japan’s Nikkei 225 dipped 0.1 per cent. Hong Kong’s Hang Seng was hit by the Moody’s news, with a late slide leaving it down 2 per cent. Airlines struggled on concern of lower profits while expectations of additional monetary tightening measures hit developers. The Shanghai Composite shed 0.5 per cent and India’s Sensex was down 0.8 per cent.
Markets were delivering a nuanced batch of signals on Monday, often countering the perceived norms of recent times, reports the FT’s global market overview. The FTSE All-Share equity index was down 0.2 per cent, the S&P 500 on Wall Street was off 0.3 per cent and commodities were mixed – with silver briefly hitting a 30-year high – while “core” bond yields were lower as traders struggle to establish a theme following last week’s volatility. The euro was under pressure again as the bounce seen at the end of last week on hopes sovereign debt contagion could be contained starts to fade. The single currency was down 0.9 per cent versus the dollar at $1.3288 and off 0.8 per cent relative to the yen at Y109.63. The FTSE Asia-Pacific index was down 0.1 per cent following a mixed session in the region, with investors concerned about the downbeat message sent by Friday’s US jobs data. The Nikkei 225 in Tokyo slipped 0.1 per cent, with exporters struggling after traders woke up to see the dollar having slipped below Y83. The S&P/ASX 200 in Sydney fell a similar amount as banks dropped on news that the government would look to boost competition in the sector. Wall Street’s resilience on Friday – when early falls following the jobs data were reversed – initially helped Hong Kong, but it fell into the red in late trading with the Hang Seng finishing down 0.4 per cent. Shanghai rose 0.5 per cent, bolstered by energy stocks.
Relief that Ireland and the European Union have agreed a €80bn-€90bn bail-out provided a positive start to the week for riskier assets, reports the FT’s market overview. The FTSE All World equity index was up 0.6 per cent, commodity prices were higher and the dollar was weaker as traders made bolder bets. US stock futures were up 0.5 per cent. News of the deal helped the region’s banks gain some ground in early dealing. The FTSE Eurofirst 300 was up 0.4 per cent and London’s FTSE 100 was higher by 0.5 per cent, boosted also by Wall Street retracing early losses on Friday to finish marginally higher. The Dublin stockmarket was up 0.6 per cent. Investors were likely also to be heartened by the Asian markets’ first chance to react to Friday’s news that Beijing was further tightening monetary policy. Another 50 basis point hike in China’s bank reserve requirement ratio, intended to trim lending and attack inflationary pressures, appeared to have been taken by traders in their stride. The FTSE Asia-Pacific index was up 0.8 per cent as the region welcomed the Ireland news. The Nikkei 225 in Japan had risen 0.9 per cent, a fresh five-month high. The euro saw early strength, gaining 0.2 per cent versus the dollar to $1.3739 and up 0.1 relative to the yen at Y114.61.