After experiencing a sharp drop on Monday and a surge on Tuesday, the Japanese stock market seems to continue its rebound trend today. After a low opening, the Nikkei 225 index confidently turned upward on Wednesday, rising 2.28% in early trading; The increase in the CSI index is 3.3%.
But investors' mentality remains very tense. Mitsushige Akino, President of Yiji Asset Management Company, stated that volatility is forcing institutions to reduce their risk assets, and the Japanese stock market is still experiencing severe volatility with an uncertain outlook.
Although the volatility of the Japanese stock market has caused fluctuations in the market, analysts believe that it is unlikely to have much impact on the monetary policy of the Bank of Japan. According to a survey, most economists and analysts still believe that the Bank of Japan will raise interest rates again by the end of this year.
65% of surveyed economists agree with the prediction of the Bank of Japan raising interest rates by the end of the year; About 21% of people said that a rate hike may take place in October; And 41% of people believe that the interest rate hike will take place in December.
Yuichi Kodama, an economist at Meiji Yasuda Institute, said that the market will eventually calm down. He does not expect this to have a significant impact on the interest rate path arrangement of the Bank of Japan, but compared to before, it does increase the possibility of risk scenarios occurring.
Interest rate hikes and sharp declines
There is no consensus in the market regarding the reasons for the sharp decline in Japanese stocks, especially regarding the inference that the Bank of Japan's interest rate hike policy led to the decline in Japanese stocks. But some analysts warn that there is a possibility of political intervention in the sudden interest rate hike by the Bank of Japan in July, which may disrupt the future path of interest rates.
Masamichi Adachi, an economist at UBS Securities, pointed out that the July interest rate hike was not the main reason for the volatility of the Japanese stock market, but the market believes that the Bank of Japan's interest rate hike is due to the weakness of the yen and political pressure. This makes future policy management of the Bank of Japan more difficult and increases the risk of another failure in monetary policy normalization.
In fact, before last week's interest rate meeting of the Bank of Japan, some politicians spoke out urging the central bank to take action to normalize policies and eliminate the negative impact of the weak yen on household consumption. This has also led some analysts to question the policy independence of the Bank of Japan.
But in Nomura Securities' view, the decision of the Bank of Japan to raise interest rates last week was correct and appropriate. Christopher Willcox, the business manager, believes that if waiting longer, closing arbitrage trades will have a greater impact on the financial market.
He added that the recent volatility in the Japanese market is mainly due to the increased risk of economic recession in the United States, rather than the actions of the Bank of Japan and the trend of the US dollar against the Japanese yen. And he believes that the United States will avoid recession.
So far, the Bank of Japan has not made any comments on the recent fluctuations in the Japanese stock market.