The Bank of Japan raised its policy rate to 1.25%, while the Federal Reserve also delivered its first rate hike in 3 years. This article reviews market trends after the 5-day holiday, as concerns grow over higher oil prices amid heightened tensions in the Middle East and volatility continues, particularly in AI stocks.
Around the holiday period, the Bank of Japan raised its policy rate to 1.25% and accelerated its pace of rate hikes to once every 3 months. The backdrop included tensions in the Middle East, a weakening yen and trends in the inflation rate, while at a press conference officials explained that the policy environment had entered a new phase. In the United States, the Federal Reserve decided to raise rates by 0.25%, indicating that both Japan and the United States were likely to maintain their tightening stance.
In the Middle East, oil prices held at around $100 per barrel. Japan remains highly dependent on the Middle East for its crude oil imports, and concerns were raised that developments involving the Strait of Hormuz could feed through into corporate costs. Uncertainty over the outlook for WTI was viewed as a risk factor for the market as a whole.
AI and semiconductor stocks remained highly volatile, repeatedly plunging from their record highs and rebounding. After the market decline from mid-September onward, there were also periods of recovery in response to moves in Nvidia and other stocks, but overall market performance was often driven by only a limited number of issues.
Specific actions to avoid and trading rules for protecting assets while continuing to pursue opportunities were presented in preparation for the market after the holiday period. The article introduced rules including avoiding market orders at the open and overreacting to news headlines, buying in 3 installments, and setting an exit level before working backward to determine the funds to allocate.