Results for: Japan

Ned Davis Research analysts have reduced the U.S. market allocation from overweight 58% to market weight 54%, citing unfavorable fundamentals and technicals. They have increased Europe and Japan allocations by 2% each. The analysts view the U.S. market as inconsistency with their neutral view on U.S. duration. The spread between the U.S. 10-Year Treasury and the 10-Year German Bund has widened to its highest level since October. The U.S. currency has declined against Europe, Japan, and the U.K. Inflation remains higher in the U.S. compared to Europe and Japan. NDR’s asset allocation recommendation is 65% stocks, 30% bonds, and 5% cash, with an overweight in the S&P 500 and a preference for small caps over large caps.

Japan’s manufacturing activity improved, nearing stability in April, while the services sector expanded at its fastest pace in 11 months. The manufacturing PMI rose to 49.9, indicating a slowdown in the contractionary trend but still marking the eleventh straight month of decline. However, the pace of decline moderated as output and new orders shrank less sharply, and new export orders fell at a slower rate. In contrast, the services PMI climbed to 54.6, marking 20 consecutive months of growth and the strongest expansion since May 2023. New orders in the service sector rose at the fastest pace in 10 months, with overseas orders showing a further increase. The composite PMI also improved to 52.6, signaling the fourth straight month of growth in private sector activity at the strongest pace since August 2023. Investors are watching the upcoming Bank of Japan policy decision closely.

Gold prices continued their downward trend in Asia, falling below US$2,300 without any significant news catalysts. Currency markets remained relatively stable, with the US dollar losing some ground against major currencies. Japan’s finance minister hinted at potential FX action, but USD/JPY showed minimal response. Bank of Japan Governor Ueda provided no new insights on the central bank’s future policy moves. The Wall Street Journal reported on potential US sanctions against Chinese banks aiding Russia’s war effort, leading to a decline in mainland Chinese stocks.

At a recent meeting in Washington, Japan’s finance minister, Suzuki, expressed his strong concern over the weak yen and its impact on rising import costs.

Japan’s manufacturing sector is showing signs of recovery, as indicated by a business survey on Tuesday. The au Jibun Bank flash Japan manufacturing purchasing managers’ index (PMI) rose to 49.9 in April, nearing the break-even level of 50.0 that separates growth from contraction. While still below the threshold, it marks the closest the index has come to expansion since June. The service sector remains robust, with the au Jibun Bank flash services PMI rising to 54.6 in April, its highest level since May 2022. This acceleration in growth suggests that the service sector is the primary driver of the Japanese economy, which is the world’s fourth largest.

Nvidia and Japan’s National Institute of Advanced Industrial Science and Technology (AIST) are partnering to develop a hybrid supercomputer that will integrate quantum computing capabilities. The system, expected to be available in 2025, will support various applications, from drug discovery to logistics optimization. The collaboration is part of Japan’s efforts to enhance its quantum computing capabilities.