According to Bloomberg reporting, Japanese equities continued to fall on the 19th, with the Nikkei Average dropping below ¥66,000 and the yen trading around the mid-¥159s, as concern over rising interest rates globally intensified. Developments surrounding the situation in the Middle East are prompting investors to avoid risk.
The Nikkei Average extended its decline in Tokyo trading on the 19th, at one point falling below ¥66,000. Concern over persistently high long-term U.S. Treasury yields and uncertainty surrounding the situation in the Middle East intensified risk-off moves, and investors shifted toward safe-haven assets. The yen traded around the mid-¥159s against the dollar, amid both demand for the dollar during geopolitical crises and concern over intervention to buy yen.
In U.S. markets, AI and semiconductor-related stocks, including the SOX constituents, fell sharply. Japanese stocks including Tokyo Electron and Advantest were also sold. Nonferrous metals, machinery and bank stocks were broadly lower, as investors across the market continued to move away from risk assets.
Kazunori Tatebe (建部和礼), chief strategist at Daiwa Asset Management, said that the outlook for the situation in the Middle East was difficult to assess and that higher interest rates were likely to persist, pointing to a risk-off market. Higher rates could raise corporate bond issuance costs for large cloud service providers and potentially affect the earnings of companies involved in capital investment and AI infrastructure.
In the bond market, futures and long-term bonds rose, while the rise in domestic interest rates also paused. Although uncertainty over a Bank of Japan rate hike weighed on bond prices, some market participants viewed whether rate hikes would proceed, amid progress in dialogue with the government, as a key focus.