AI-related stocks plunged this week as oil prices rose and U.S. yields fell, while USD/JPY remained stuck in the ¥157 range. The BOJ indicated that it would keep rates unchanged while continuing to normalise monetary policy, and global capital was reassessed from the perspectives of profit allocation and credit quality.
USD/JPY tested the ¥158 level again this week but failed to hold there, trading in the ¥157 range toward the end of the week. After the FOMC meeting on the 28th, it temporarily rose to ¥158.35, but subsequently returned to the ¥157 range as falling U.S. yields and expectations of additional BOJ rate hikes supported the yen. From the 26th to the 27th, USD/JPY also moved back toward the upper ¥157 range as U.S. stocks rebounded.
Valuations of AI-related stocks came under increasing pressure, and concerns about recouping investment resurfaced following Alphabet's earnings. On the 30th, selling spread across semiconductor stocks including Intel, AMD and Nvidia, raising concerns about cash outflows from AI investment. While funds shifted toward U.S. Treasuries as safe-haven assets, gold fell sharply.
The U.S. economy continued to grow, while accelerating PCE inflation and higher oil prices became factors that could prolong monetary policy tightening. The 10-year U.S. Treasury yield fell to around 4.93%, but higher oil prices and resilient economic activity offset the downward pressure on stocks.
Concerns about the situation in the Middle East intensified in the oil market. December Brent crude futures rose to $117.64, while WTI reached $104.12. Transport risks in the Middle East revived concerns about oil supply and at times became a factor weakening the yen. Although the BOJ's Monetary Policy Meeting kept policy unchanged, moves toward normalising monetary policy, including an expansion of its ETF selling policy, are expected to continue.
Market views diverged across emerging economies. In Brazil, equities, the currency and government bonds were sold simultaneously after the presidential election, heightening concerns about fiscal management. In Mexico, after GDP growth in the July–September quarter exceeded market expectations, the currency was initially sold but subsequently bought back.