Fluctuations in the external financial environment (yen appreciation, stock price declines and negative interest rates)

「Market volatility risk: impact on earnings from intensifying competition in a world with positive interest rates, changes in the composition of assets and liabilities, declining lending share, narrower spreads and changes in the yield curve」

「Market volatility has increased following the Bank of Japan's lifting of its negative-interest-rate policy and other factors, and the market risks of assets held by our group have become apparent.」

「Market volatility has increased due to higher interest rates in Europe and the US in response to inflation and revisions to the Bank of Japan's YCC (yield curve control) policy, and the market risks of assets held by our group have become apparent.」

「Market volatility has increased amid the emergence of geopolitical risks triggered by Russia's invasion of Ukraine and higher US interest rates against a backdrop of economic recovery, and the market risks of assets held by our group are gradually becoming apparent.」

「In financial markets, the Nikkei 225 continued to rise, supported by favorable corporate earnings and other factors. In the second half of the year, concerns about a slowdown in the global economy due to US-China trade tensions led to a decline, but from the beginning of the new year it began to recover as US share prices turned upward.」

「In financial markets, the Nikkei 225 moved within a range between the 21,000 and 23,000 levels, with volatile price movements amid concerns about US-China trade tensions. The yield on newly issued 10-year Japanese government bonds, a benchmark for long-term interest rates, generally remained in the 0.0% range under the Bank of Japan's quantitative and qualitative easing policy. The yen generally weakened against the US dollar, driven by higher US long-term interest rates amid growing expectations of additional rate hikes by the Federal Reserve Board and by reduced geopolitical risk following the US-North Korea summit.」

「In financial markets, although geopolitical risks in East Asia prompted periods of risk aversion, the Nikkei 225 rose to the 24,000 range amid global equity gains supported by a gradual recovery in overseas economies, including the steady recovery of the US economy and signs of a pickup in China and other Asian economies. However, from the beginning of the year through the end of the fiscal year, it temporarily fell to the 20,000 range as US equity markets corrected amid concerns about US monetary tightening and trade friction caused by protectionist policies. The yield on newly issued 10-year Japanese government bonds, a benchmark for long-term interest rates, generally remained in the 0.0% range under the Bank of Japan's quantitative and qualitative easing policy. The yen traded within a range between the 104 and 114 levels against the US dollar during the fiscal year.」

「In financial markets, although geopolitical risks in East Asia prompted periods of risk aversion, the Nikkei 225 temporarily rose to the 23,000 range on expectations that US economic expansion driven by large-scale tax cuts and infrastructure investment would spill over to Japan. The yield on newly issued 10-year Japanese government bonds, a benchmark for long-term interest rates, generally remained in the 0.0% range as the Bank of Japan continued its quantitative and qualitative monetary easing policy. The yen traded in a range between the 107 and 114 levels against the US dollar.」

「In financial markets, there were periods of risk aversion amid concerns about geopolitical risks in East Asia. However, the Nikkei 225 rose to the 20,300 range, tracking global equity gains as overseas economies recovered gradually, supported by a steady recovery in the US economy and signs of a pickup in China and other Asian economies. The yield on newly issued 10-year Japanese government bonds, a benchmark for long-term interest rates, generally remained in the 0.0% range. Toward period-end, the yen weakened against the US dollar, moving from the 107 range to the 112 range.」

「In financial markets, although the resilience of the US economy was recognized, price movements were limited amid expectations that the pace of monetary-policy normalization would be gradual. The yen traded at ¥112.00 to the US dollar, up ¥0.19 from the end of the previous fiscal year, while the Nikkei 225 rose ¥1,124.17 to ¥20,033.43. The yield on newly issued 10-year Japanese government bonds, a benchmark for long-term interest rates, rose 0.010 percentage points from the end of the previous fiscal year to 0.075%.」

「In financial markets, the yen's appreciation accelerated amid a global flight to safety following the UK's decision to leave the EU, and the Nikkei 225 fell to the 14,000 range. The yield on newly issued 10-year Japanese government bonds, a benchmark for long-term interest rates, also temporarily fell to minus 0.300%. However, after the US presidential election, expectations for the economic expansion measures of the new Trump administration and the FOMC's decision to raise its target policy rate caused the yen to weaken, accompanied by an uptrend in both the Nikkei 225 and long-term interest rates.」

「In financial markets, the yen strengthened amid global risk aversion following the UK's decision to leave the EU, sending the Nikkei Stock Average down to the ¥14,000 range. The yield on newly issued 10-year Japanese government bonds, a benchmark for long-term interest rates, also fell temporarily to negative 0.300%. However, following the outcome of the US presidential election and the Federal Open Market Committee's (FOMC) decision to raise its target for the policy rate, the yen weakened and the Nikkei Stock Average entered an upward trend. At the end of the third quarter, the Nikkei Stock Average stood at ¥19,114.37, up ¥2,355.70 from the end of the previous consolidated fiscal year; the 10-year JGB yield stood at 0.040%, up 0.090 percentage points; and the yen-dollar exchange rate stood at ¥116.49, down ¥3.81 against the yen.」

「Following the Bank of Japan's introduction of quantitative and qualitative monetary easing with yield curve control, it became clear that the current low-interest-rate environment would continue for the foreseeable future. There are concerns that the challenging environment surrounding regional financial institutions will persist for a considerable period.」

「Following the UK referendum decision to leave the EU, global risk aversion triggered a sharp appreciation of the yen and decline in stock prices. The yen-dollar exchange rate stood at ¥102.91, up ¥9.77 against the yen from the end of the previous consolidated fiscal year, while the Nikkei Stock Average stood at ¥15,575.92, down ¥1,182.75. In addition, the yield on newly issued 10-year Japanese government bonds, a benchmark for long-term interest rates, fell 0.180 percentage points from the end of the previous consolidated fiscal year to negative 0.230%.」