Global stock markets exhibited varied responses on Monday following an announcement that the United States and Japan had intervened to support the Japanese yen against the U.S. dollar. Meanwhile, oil prices experienced a significant drop after statements from U.S. President Donald Trump indicated a suspension of military strikes on Iran.
On the currency front, the dollar declined to around 155.20 yen after confirmation of intervention by the U.S. and Japan to restrain the dollar’s surge to record highs against the yen. This currency was nearly 164 yen last week. By late Monday, one dollar was valued at 156.68 yen in Tokyo. A weaker yen boosts Japanese firms’ profits from overseas operations by elevating their yen-denominated value. Additionally, it attracts many foreign tourists benefiting from favorable exchange rates. However, a depreciated yen increases Japan’s import costs, particularly for oil and other necessary imports.
The dollar remains a haven for investors amidst uncertainties, such as conflicts. Although President Trump has praised the dollar’s strength, a depreciated dollar can enhance the competitiveness of U.S. exports. According to analysts, the U.S. Treasury proactively purchased yen through the Federal Reserve Bank of New York to increase its value, a move that signals strong U.S. support for the yen. Stephen Innes from SPI Asset Management noted this cooperation in his commentary, emphasizing that the U.S. supported the yen’s defense proactively.
European markets displayed mixed results. Germany’s DAX rose by 1.3% to 25,963.51, and France’s CAC 40 increased by 1% to 8,596.56. Conversely, the UK’s FTSE 100 saw little change, standing at 10,861.95. In futures trading, the S&P 500 index futures advanced by 0.5%, while those for the Dow Jones Industrial Average grew by 0.6%.
Asian markets also showed varied movements. Japan’s Nikkei 225 dropped by 0.9% to 63,754.90, and South Korea’s Kospi fell by 5.1% to 6,257.45. Despite a historic surge on Friday, driven by significant gains in shares of Samsung Electronics and SK Hynix, Monday saw both companies’ shares declining by 8.8%. Meanwhile, Hong Kong’s Hang Seng index increased by 0.5% to 26,009.40, and China’s Shanghai Composite index decreased by 0.6% to 3,809.66. In Australia, the S&P/ASX 200 edged up by 0.2% to 8,996.90 while Taiwan’s Taiex and India’s Sensex grew by 0.6% and 0.8%, respectively.
The de-escalation in Middle East hostilities contributed to a 4.7% fall in Brent crude prices, bringing them down to $83.92 per barrel. U.S. benchmark crude also dropped by 5.6%, settling at $79.89 per barrel.
On Wall Street, Friday concluded a volatile month with gains. The S&P 500 increased by 0.7%, the Dow industrials rose by 0.5%, and the Nasdaq composite climbed by 1%. These fluctuations in market activity occurred amid concerns over rising oil prices because of tensions with Iran and skepticism on the profitability of artificial intelligence investments by major tech companies.
Amazon spearheaded market advancements with a 15.3% rise due to significantly better profit reports than anticipated, attributed partly to accelerated growth in its cloud services.
Associated Press journalists Mayuko Ono and Mari Yamaguchi in Tokyo contributed to writing this report.
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