The downgrade of the US rating has led to a diving rating in the Japanese, US, and European stock markets | credit | diving rating
According to the report of Nihon Keizai Shimbun on August 4, the world stock market was in turmoil. The Nikkei Average fell 548 points on the third day, a decrease of 1.68%. If we include the previous day's decline points, it has fallen by more than 1300 points in the two days. Taking the decline in the US sovereign credit rating and the rise in interest rates as an opportunity, investors have increased their wait-and-see sentiment. The trend of US interest rates and corporate performance has become the focus.
Looking back at the market data as of March 3, Masahiko Zenazawa, the trading director of the stock department of Huili Securities, pointed out: "Why did the decline in the credit rating of the US treasury bond bonds to such a large extent lead to the sell-off of Japanese stocks? Perhaps the only reasonable explanation is that many investors are waiting for the bearish factor."
One day after Fitch downgraded the credit rating of US treasury bond bonds on the 1st local time, various markets have responded in succession. On the 2nd, the Nikkei Average fell 768 points, with a significant decline. The Nasdaq Composite Index fell 2.17%, while the European Stoxx 600 Index fell 1.35%.
From the end of last year to the end of July this year, the Nikkei Average rose by 27%, higher than major global stock indices during the same period, such as the Dow Jones Industrial Average, which rose by 7%. During this period, the expected price to earnings ratio of the Nikkei Average rose from 12 times to a range of 15 times, and the feeling of undervaluation gradually weakened.
However, the idea of a stock price increase is not completely fading. Many people believe that investors who bought stocks in the early days of the rising market tend to take profits by taking the opportunity of the decline of the credit rating of the US treasury bond bonds.
According to Takada from JPMorgan Securities, who is familiar with investor buying and selling trends, "we have not seen a significant sell-off of Japanese stocks yet." Takada pointed out that there have been movements to reduce buying and pre-sale futures in response to future downside risks, but there has not been a "distance from Japanese stocks" yet.
Global investors have strengthened their wait-and-see attitude. The biggest focus is on the direction of US interest rates.
When interest rates rise, the theoretical stock price calculated based on interest rates falls. When interest rates are in an upward phase, investors find it difficult to purchase stocks with excessively high prices. Especially American high-tech stocks with high PER, as well as Japanese semiconductor related stocks that are easily linked with them, are often kept at a distance.
Under the influence of the US decision to issue additional treasury bond, the yield of 10-year treasury bond, as a long-term interest rate indicator in the US bond market, rose on the second day, once rising to 4.12%. On the 3rd, the Asian time interest rate continued to rise, rising to 4.16%, the highest level since November 2022.
If the market is strongly aware of the risk of US fiscal deterioration, the 10-year treasury bond bond yield record set last year since 2007 is expected to be refreshed. Investors also have to adopt a wait-and-see attitude.
On the other hand, many predict that as inflation slows down, the Federal Reserve will stop raising interest rates in the near future. "It is expected that the policy interest rate in 2024 will be lower than the current 5% range, and the possibility of long-term interest rates significantly exceeding 4% is very low," said Xiuyu Ujia, senior bond strategist at Mizuho Securities
On the 2nd, an electronic screen on the streets of Tokyo showed a decline in the Nikkei Average.
