Farewell to Tamiya Shunsaku, the world's model maker
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Japan Times
15 hours ago
- Japan Times
Japan investors brace for BOJ and earnings results after Trump-fueled rally
Japan's surprise trade deal with the U.S. sent its markets on a wild ride, pushing stocks to all-time highs and fueling a selloff in government bonds. Automakers' shares led a market-wide surge after U.S. President Donald Trump announced the deal on Wednesday. The broad Topix index hit a record close. Investors, finally having some good news, seemed to largely ignore thorny questions about the details of the trade deal, let alone the tenuous position of Prime Minister Shigeru Ishiba following a recent election setback. But as the dust settles and focus returns to problems closer to home, investors are questioning whether the rally was a sign of things to come — or just a blip for a market that is facing multiple sources of volatility in the coming weeks and months. "The deal came and there was this immense relief, and now markets are saying: 'hang on, not too much,'' said Vishnu Varathan, head of economics and strategy at Mizuho Bank. "It's a relief that we didn't bleed to death. But we are still in triage, if not the ICU.' The headache for investors in Japan is that almost every piece of good news comes with a caveat. The trade deal was a clear win, but the 15% tariffs facing Japanese companies are still well above their level at the start of the year. The economy may get a boost, but that could in turn speed up interest rate hikes. The deal removes one reason for Ishiba to cling to power — since he had made clear he wanted to get it done while in office — but the win means he now has a better case for hanging on. That has shifted attention to some major events in the coming days, which will offer clues to the direction of travel for a stock market that has underperformed its regional peers this year. The Bank of Japan's monetary policy announcement on Thursday, although unlikely to result in a rate change, will be scrutinized for hints that the central bank may hike as early as September. That could hit both bond and stock prices. Investors will also be focused on corporate earnings, with Fujitsu, Tokyo Electron and Nissan Motor among the companies set to report. Those earnings will be far too early to gauge the impact of the trade deal, but they will help investors get a sense of how strong Japanese companies are as they prepare for a prolonged period of higher tariffs — however good the figures might look compared to the worst case scenario. The 15% tariff on Japanese goods, including autos, was a relative reprieve from earlier threats of 25% or higher. Japan also agreed to invest $550 billion into the U.S. as part of the deal, a vague pledge that has left market participants guessing at the potential details. "You've certainly got the makings of an extended rally,' said Pelham Smithers, an analyst who runs an eponymous Japan equity research firm in the U.K. "But the bigger questions will be Bank of Japan policy, and whether Trump backtracks on this tariff deal.' Smithers, who was engrossed in the video-game Civilization when news of Trump's Japan deal broke, says his "army of sales people' were swamped with calls from clients asking for updates on Japan's market. The enthusiasm is understandable. After trading sideways for most of July, the Topix Index jumped 4% over the course of the week, notching a new all-time high. Toyota Motor's shares posted their biggest intraday gain since 1987. SoftBank Group's shares hit a record high. Japan's 10-year bond yields reached their highest level since 2008 after the trade deal was announced. Two-year yields, which are sensitive to changing interest rate expectations, also jumped. "The tariff news was a complete positive surprise,' said Hisashi Arakawa, director and head of equities at abrdn Japan. "I didn't expect the market to move that quickly.' The outlier to the wild moves was the yen, which fluctuated between gains and losses as traders digested the news. Caution was returning to the stock market by the end of the week, with both the Nikkei 225 index and the Topix closing down almost 1% Friday, part of a wider decline in Asia. One major concern is that the weakened government — whether led by Ishiba or someone else — may give in to opposition calls for tax cuts, worsening Japan's already stretched fiscal position. Worries about government finances have weighed on global debt markets in recent months, hitting Japan's ultralong bonds alongside those in the U.S. and elsewhere. Local media reports that Ishiba will soon announce his resignation have fueled these concerns, although he denied the reports. For now, investors in Japan have more questions than answers. The country's trade relationship with the U.S. is, more or less, clear. But almost everything else remains in flux, and market watchers think the recent rally may reflect hope more than reason. "We all need to cool our heads and regroup,' said Yusuke Sakai, a senior trader at T&D Asset Management in Tokyo, who called the stock rally a knee-jerk reaction.
Japan Today
a day ago
- Japan Today
Nikkei likely to stay above 40,000 despite political uncertainty
A financial data monitor in Tokyo shows the Nikkei Stock Average climbing above 42,000 on July 24, 2025. (Kyodo) ==Kyodo By Risako Nakanishi Boosted by a Japan-U.S. trade deal, the Nikkei stock index is expected to stay afloat above the 40,000 threshold at least for a while, despite political uncertainty created by the major setback suffered by Japan's ruling parties in a recent national election. The benchmark may soon break its record high by surpassing 42,224.02 registered a year ago, but the market could face a downside risk if long-term interest rates surge further due to expectations of expansionary fiscal measures like a consumption tax cut. "With uncertainty over tariff negotiations dispelled, it makes it easier for companies to foresee future earnings, helping to support the stock market," said Maki Sawada, a strategist at the Investment Content Department of Nomura Securities Co. The Nikkei added more than 2,000 points over the two days through Thursday after the agreement that U.S. tariffs on imported Japanese cars and other goods will be lowered sharply to 15 percent, although the yield on the key 10-year government bond spiked to 1.600 percent, its highest level since 2008. "As long as higher interest rates are accompanied by improving business performance, stocks will rise as seen in the past," Sawada said, expecting the index to be supported around the 40,000 line. The market is likely to be buoyed by hopes for upward revisions in earnings after some major companies like Toyota Motor Co. projected a hefty 35 percent drop in net profit for this fiscal year by factoring in an additional 25 percent tariff imposed by Washington from April. Trade data show that Japan's shipments to the United States, the largest export destination for Japanese automakers, dropped 11.4 percent in value terms in June from a year earlier for the third consecutive monthly decline, contributing to a 30.8 percent plunge in its trade surplus with the country. "Stocks may be further lifted by positive incentives like more U.S. trade deals with the European Union and China, as well as economic data and earnings," possibly sending the Nikkei to the 44,000 level at one point, said Masahiro Yamaguchi, head of investment research at SMBC Trust Bank. While many analysts believe the current level of long-term interest rates at around 1.6 percent is unlikely to be an obstacle for stocks to chase higher ground, a spike toward 2 percent may stir concerns about increased borrowing costs and dent market sentiment. Situations surrounding the bond market suggest the likelihood of the yield climbing further, as the Japan-U.S. trade deal helped ease concern about the prospects of the domestic economy and will make it easier for the Bank of Japan to further raise interest rates. The tariff deal is a "big step forward," as it reduces economic uncertainty facing Japanese companies under U.S. President Donald Trump's trade policy, BOJ Deputy Governor Shinichi Uchida said Wednesday. His remark fueled speculation that the central bank will increase the policy rate again after raising it three times since March last year to around 0.50 percent, as it shifts from a decade of unorthodox monetary easing. "Given that the tariff negotiations ended up with a desirable agreement despite expectations of tough going, the recession risk in the second half of this year has alleviated considerably," said Daiju Aoki, chief Japan economist at UBS SuMi TRUST Wealth Management Co. "Japan's interest rates are likely to remain elevated with the probability of a rate hike by the end of year increasing significantly," Aoki said, adding that investors will adopt a cautious stance about buying bonds, whose prices move inversely to yields. Reflecting expectations for weakening demand, the auction for 40-year government bonds held Wednesday was sluggish, with the bid-to-cover ratio standing at 2.13 percent, its lowest level since 2011. Higher yields also followed on from the results of Sunday's House of Councillors election, which raised the possibility that expansionary fiscal measures may be adopted in the future, leading to further deterioration in Japan's fiscal health. The Liberal Democratic Party and its coalition partner Komeito suffered a major setback in the election, losing their majority in the upper house, with opposition forces urging that the consumption tax be cut, suspended, or even abolished to ease the pain of inflation. The ruling coalition, meanwhile, pledged to deliver cash handouts, which are likely to require fewer financial resources. "Currently the key long-term yield remains at around 1.6 percent, as there have not been specific moves leading to stimulus measures such as reducing the consumption tax," said Yutaka Miura, senior technical analyst at Mizuho Securities Co. "But if such moves come into sight, such as opposition parties starting to request such measures, the yield could climb further," he said, adding that it could affect negatively to the stock market if it rises to between 1.7 and 1.8 percent. © KYODO
NHK
2 days ago
- NHK
Farewell to Tamiya Shunsaku, the world's model maker
Tamiya Shunsaku, who turned his father's company into a global model brand, died on July 18 at 90. Known for detailed plastic kits and the hit Mini 4WD, he led Tamiya to worldwide fame with precision and passion.
