Tokyo markets edged lower against a backdrop of expectations for a US rate hike. The Nikkei average ended about ¥93 below the previous day, while the uncollateralized overnight call rate in the short-term money market stood at 0.977% and the dollar-yen rate softened toward the mid-¥159 range.
Tokyo markets edged lower as expectations for a US rate hike weighed on sentiment. The Nikkei Stock Average ended trading about ¥93 below the previous day, with AI-related and semiconductor stocks sold, while dip-buying narrowed the decline. TOPIX maintained its eight-session winning streak, although its closing level did not turn slightly higher.
In the bond market, long-term interest rates continued to rise, while futures fell for a third straight session. Trading in the uncollateralized overnight call market stood at 0.977%, remaining elevated as expectations for higher interest rates strengthened. In the foreign exchange market, the dollar-yen rate softened toward the mid-¥159 range at times, with yen buying and dollar selling seen as European traders entered the market.
Crude oil and gold markets also remained active. WTI rose for a third straight session, supported by yen weakness, while gold futures traded sharply lower. Economic data included a slight increase in industrial production and a rise in housing starts, indicating localized improvements in the economy.
Key news items included a summary of remarks by the Bank of Japan governor and reports concerning fiscal and interest-rate outlooks, while attention was also focused on US-China diplomatic and military developments.
The key takeaway was that expectations for a US rate hike produced sporadic moves across the equity, bond and foreign exchange markets, while interest rates in the short-term market remained elevated.