On the Tokyo Stock Exchange, the Nikkei star index closed 1.59% to 41,826.34 points and the widen Topix index from 1.75% to 2977.55 points.
The Tokyo Stock Exchange continued to climb Thursday after the Japan/United States agreement but the Japanese debt remained under pressure due to political uncertainty, and the other Asian places displayed their caution in the face of the last trade negotiations led by Washington.
Tokyo is still strengthening, other prudent markets
On the Tokyo Stock Exchange, the Nikkei star index closed 1.59% to 41,826.34 points and the widen Topix index from 1.75% to 2977.55 points.
After jumping 3.5% the day before, the Tokyo market remains doped by the announcement of a trade agreement between Japan and the United States, which sets an American surcharge of 15% for Japanese products-below 25% initially scheduled for August 1.
“The increase in Wall Street, the United States/Japan agreement, but also the prospect of a trade agreement with the EU are likely to support the scholarship,” notes Tokai Tokyo Intelligence experts.
The agreement concluded by Tokyo provides that the rights imposed on Japanese automobile exports to the United States will be reduced to 15% – against a current “reciprocal” surcharge of 25%. After fleeing Wednesday (Toyota leaping by around 14%), the titles of car manufacturers resumed their breath on Thursday.
In view of the agreements concluded by the Trump administration so far (Japan, Vietnam, United Kingdom, Philippines, Indonesia), “it seems that a customs range of 10% to 20% is the new standard for countries that are negotiating” in an attempt to escape the high from the strongness that Washington intends to impose them on August 1, Note Lloyd Chan, MUFG.
“This also reflects an evolution of American trade policy towards relatively more moderate protectionism” than initially displayed, “he believes.
For the other Asian places, the time was for the attitude and caution in very volatile exchanges: the Sydney Stock Exchange sold 0.32%, Taipei won 0.24%, the Hong Kong Hang Seng index increased by 0.51%around 9:30 am.
Seoul resisted (+0.21%), reassured by a stronger increase than expected from South Korean growth in the second quarter.
The yen hesitates
After deciding on Wednesday and Thursday in the first exchanges, the Japanese motto returned to 0.15% around 9:30 am, at 146.31 yen for a dollar.
“The global scholarships rebound, convinced that trade agreements reduce uncertainty. The yen, on the other hand, hesitates in particular given the prospect of an imminent resignation of Prime Minister Shigeru Ishiba “after his stinging electoral backhand on Sunday, the experts of ING bank note.
“If the monetary policy of the Bank of Japan should remain unchanged, speculation around a possible change (of the government) could accentuate the short -term volatility, and the mixed data on Japanese activity – contraction of the manufacturing sector against the growth of services – accentuate uncertainty”, abound the analysts of Standard Charterd.
Japanese debt pressure
The Japanese debt market is under pressure again.
Japanese sovereign rates at 10 years have jumped since Tuesday, rising to higher since 2008. They settled Thursday at 1.59% – an increase which reflects a lesser appetite for investors, since they demand higher rates.
Another sign of this drop in demand: one emission by the government of Japanese state bonds at 40 on Wednesday generated the lowest request for 14 years for this category of titles.
“This highly anticipated auction was weak”, in the wake of the electoral debacle which saw the coalition in power in Tokyo lose its majority in the upper room of Parliament on Sunday, observes Min Joo Kang, of ING.
Pressures are intensifying to initially push Prime Minister Ishiba. “Despite the trade agreement, investors have expressed their concerns about political uncertainty in Tokyo and the additional constraints weighing on the budgetary situation,” she explains.
The financial markets are thus concerned with the massifs plans of aid and tax reductions promised before the election as much by the government as by the opposition parties, at the risk of aggravating the already heavy debt of the country.
And this while the BOJ decreases its debt purchases in the context of the tightening of its monetary policy, without its withdrawal being filled by traditional bond market investors.
Oil increase
The oil market climbed slightly, digesting the trade agreements unveiled by Washington.
Around 9:30 am, the barrel of North American WTI gained 0.69% at 65.70 dollars and that of Brent de la Mer du Nord 0.60% at 68.92 dollars.