Oil prices and gold retreated from multi-month record peaks after U.S. President Donald Trump calmed the market anxiety over the potential U.S military action against Iran. The decline on Wall Street extended to the selloff in tech stocks in Asian trading. Investors sold off expensive tech, chips, and AI stocks, shifting their focus to cheaper stocks in other industries.
How the Rotation Affected Japan’s Stock
The Japanese yen had a slight recovery from its drop to the weakest point against the U.S dollar since July 2024. The bounce back was triggered by the Japanese authorities’ warning about their possible intervention. The Japanese bond yields peaked as the people thought the government might call for an early snap election. The speculation was later confirmed, as the Prime Minister of Japan, Sanae Takaichi, is planning to dissolve the parliament’s lower house by calling a snap parliamentary election on February 8, easing the hype. The snap election is a scenario that is expected to boost the slowly moving economy by cutting or reducing taxes. Japan’s 20-year yield dropped 2.5 basis points today after vaulting to an all-time high of 3.165%
The Prime Minister of Japan, Satsuki Katayama, issued another verbal warning, stating that officials will take “appropriate action against excessive FX moves without excluding any options.”
U.S Benchmark and Asian Trading
Brent crude, the international standard, dropped from $66.82 to 3.4% becoming $64.25 parallel to it NYMEX futures also dropped 3.4%, resulting in $59.89 from $62.36. Gold fell by 0.5%, resulting in around $4,598 per ounce. However, on Wednesday, it boosted unprecedentedly, resulting in $4,642.72. Although the stocks in Asia were mixed, tech shares were selling. In Asian trading, Tokyo’s Nikkei N225 eased to 0.9% after hitting a small-time peak. Topix extended its record high today with a 0.8% advance.
Taiwan’s TAIEX dropped 0.4%; in the meantime, Hong Kong’s Hang Seng also slipped 0.5%, with the tech shares weighing. Chinese blue chip CSI300 lowered 0.1%, while in South Korea, KOSPI added up 1.3%, opening at a fresh record high. Nevertheless, the Bank of Korea kept the interest rate unchanged, stating that it ended its current easing cycle to prioritize financial stability. This scenario was already expected by economists. The tech-focused Nasdaq dropped 1%, and the S&P 500 E- mini became flat after the cash index, sinking 0.5% overnight.
Trump said on Wednesday that Iran seems to have reduced its violence, and he believed that there won’t be large-scale executions currently. Kyle Rodda, one of Australia’s prominent market commentators, said that, “There’s a rotation playing out on Wall Street that’s ultimately weighing on indices but indicates that the internals of the market are holding up reasonably well,” he also added that “The strength in cyclicals, in no small part due to the positive outlook for the U.S. economy, is propping up stocks and providing constructive signals to market participants of broadening market strength.”
