Oil settles up on supply threats, hits 2024 highs during session

April 2 – Oil prices settled higher on Tuesday after a session in which Ukrainian attacks on Russian energy facilities and escalating conflict in the Middle East pushed the Brent benchmark above USD 89 a barrel for the first time since October.

Brent futures for June delivery settled up USD 1.50, or 1.7%, at USD 88.92 after touching a peak of USD 89.08.

US West Texas Intermediate (WTI) crude futures for May settled up USD 1.44, or about 1.7%, to USD 85.15 after touching a peak of USD 85.46, also the highest since October.

A Ukrainian drone struck one of Russia’s biggest refineries in an attack Russia initially said it repelled.

Russia’s Astrakhan gas processing plant, controlled by energy giant Gazprom, also halted production of petroleum products after a repair-related stoppage on March 30, the company said, confirming an earlier report from Reuters.

A Reuters analysis of images showing the impact of the attack suggests it hit the refinery’s primary oil refining unit, which accounts for about half of the plant’s total annual production capacity of 340,000 barrels per day (bpd). Damage did not appear to be serious.

Gasoline and diesel fuel stocks in Russia remain at a high level, Moscow said.

Russia, among the top three global oil producers and one of the largest exporters of oil products, has been contending with Ukrainian attacks on oil refineries and has also attacked Ukrainian energy infrastructure.

“The likelihood that continued restricted Russian product exports could further tighten US petroleum supplies has suddenly forced re-calculation of US (oil) balances across the rest of this month and possibly beyond,” said Jim Ritterbusch, president of Ritterbusch and Associates LLC.

In the Middle East, Iran has vowed to take revenge on Israel for an airstrike that killed two top generals and five military advisers at the Iranian embassy compound in Damascus.

Israel has been at war against Iran-backed Palestinian group Hamas in Gaza, but direct Iranian involvement could spark a “region-wide conflict with plausible impact on oil supply,” said Tamas Varga at oil broker PVM.

“Despite a flurry of diplomatic activity meant to turn down the heat on the situation, there is definitely a chance the Iranians’ response will not be as measured this time,” said Bob Yawger, director of energy futures at Mizuho.

US crude oil inventories fell by 2.3 million barrels last week, according to market sources citing American Petroleum Institute figures on Tuesday. Official government data will be published Wednesday at 10:30 a.m. EDT.

Elsewhere, an ecological organization said a European satellite had spotted an oil spill in the northern Caspian Sea near Kazakhstan’s giant Kashagan oilfield.

Markets are also looking ahead to Wednesday’s ministerial panel meeting of OPEC+, the Organization of the Petroleum Exporting Countries (OPEC) and allied producers. The panel is unlikely to recommend any change in oil output policy, OPEC+ sources told Reuters.

The demand outlook perked up as March data showed an expansion in Chinese manufacturing activity for the first time in six months and in the US for the first time in a year and a half.

(Reporting by Laura Sanicola in Washington, Natalie Grover in London, Colleen Howe in Beijing and Trixie Yap in Singapore; Editing by David Goodman, Emelia Sithole-Matarise, Paul Simao, and David Gregorio)

Japan warns of action against excessive yen volatility

TOKYO, April 2 – Japanese Finance Minister Shunichi Suzuki said authorities were ready to take appropriate action against excessive exchange-rate volatility, repeating his warning to yen bears as Tokyo tries to prevent a destabilizing fall in the currency.

Suzuki stopped short of threatening to take “decisive action” against excessive moves, language the minister used last week when the yen slumped to a 34-year low, suggesting officials are keeping their powder dry as they watch how currency moves play out.

“All we can say is that we will take appropriate action against excessive volatility, without ruling out any options,” Suzuki told a regular news conference on Tuesday, when asked about the yen’s continued falls.

The yen has been on a downtrend despite the Bank of Japan’s decision last month to end eight years of negative interest rates, as traders interpreted its dovish language as signaling that the next rate hike will be some time away.

US Federal Reserve Chair Jerome Powell’s remarks on Friday that there was no need “to be in a hurry to cut” interest rates kept the dollar firm by cementing market expectations that the gap between US and Japanese rates will stay wide.

Markets remain on alert for the chance of intervention by Tokyo as the dollar hovers around 151.610 yen in Asia on Tuesday, near the 34-year high of 151.975 hit on Wednesday.

On the day the yen hit 34-year lows, Suzuki said Tokyo will take “decisive steps” against excessive currency moves. The language is considered by markets as the strongest warning by authorities that currency intervention was nearing.

Japanese authorities, including Suzuki, had not used the same language since then.

The yen had been declining quite sharply back then, Suzuki said when asked about the day he threatened to take decisive action.

“Language aside, we’re now watching markets with a strong sense of urgency,” Suzuki said. “We are carefully watching daily market moves,” he added.

Suzuki said monetary policy was only among many factors that affect currency moves, such as each country’s current account balance, price developments, geo-political risks, market sentiment, and speculative moves.

“It’s important for currency rates to move stably reflecting fundamentals. Excessive volatility is undesirable,” he said.

Japan intervened in the currency market in 2022, first in September and again in October, to prop up the yen as the currency slid towards 152 to the dollar.

Suzuki declined to comment when asked whether Japan would intervene heavily in a single blow to unwind speculative positions, or conduct intervention in several stages to smooth volatile moves.

Japanese policymakers have historically favored a weak yen as it helps boost profits for the country’s big manufacturers.

But the yen’s recent sharp declines are raising concerns for policymakers as they inflate the cost of raw material imports, hurting consumption and retail profits – a complication for the BOJ’s goal of decisively moving out from decades of accommodative policy.

(Reporting by Leika Kihara; Editing by Tom Hogue, Christopher Cushing, and Shri Navaratnam)

All bow to the mighty dollar

April 2 – Strong US manufacturing data on Monday ensured the second quarter of the year started with a bang in perhaps the two most important financial assets in the world – the dollar and US Treasuries – which should set the tone for Asia on Tuesday.

Bond yields jumped and the dollar spiked to its highest level since November as the ‘higher for longer’ Fed and US economic ‘soft landing’ narratives tightened their grip on fixed income and currency markets.

Curiously though, Wall Street held up reasonably well – the Dow fell 0.6% but the S&P 500 only shed 0.2% and the Nasdaq closed in the green. Just.

Could this resilience offset higher yields and a stronger dollar, and support risk appetite in Asia?

If not, a disappointing raft of Asian factory activity figures on Monday will be cited, along with the dollar’s ascent.

The greenback has built up a head of steam, breaking above 105.00 on an index basis for the first time this year and pushing the yen toward 152.00 per dollar back into potential Japanese intervention territory.

It looks like the dollar has momentum too, having weakened in only two of the last 13 sessions. US futures market data show that hedge funds have amassed their biggest net long dollar position since September 2022, most of which is against the yen.

Monday’s batch of Japanese economic indicators gave off mixed signals, and so offered the yen no clear path. But the US ISM activity data and another uptick in the Atlanta Fed’s GDPNow model estimate for Q2 growth certainly did.

Chinese markets started the week on the front foot, however, after a private survey showed Chinese manufacturing activity expanded at the fastest pace in 13 months in March, reinforcing surprisingly strong official survey data over the weekend.

Mainland Chinese blue chips rose 1.6% for their best day in a month, easily outperforming the MSCI Asia ex-Japan index which ended slightly lower, and Japan’s Nikkei which lost 1.4%.

Asia’s economic and corporate calendar on Tuesday is fairly light. The latest Australian and Indian manufacturing purchasing managers index reports and South Korean consumer inflation are the pick of the bunch.

Economists polled by Reuters reckon monthly inflation in Asia’s fourth-largest economy slowed in March to 0.3% from 0.5%, and the annual rate held steady at 3.10%.

With inflation running well above the Bank of Korea’s 2% target, interest rates are likely to be kept at their 15-year high of 3.5% well into the second half of the year. Like many central banks in Asia, the BOK will probably for the Fed to ease US monetary policy before moving.

Here are key developments that could provide more direction to markets on Tuesday:

– Australia manufacturing PMI (March)

– India manufacturing PMI (March)

– South Korea consumer inflation (March)

(By Jamie McGeever; Editing by Josie Kao)

Dow, S&P close lower as manufacturing data lifts yields

NEW YORK, April 1 – The Dow and S&P 500 edged lower on Monday, dragged down by investor worries over the timing of interest rate cuts by the Federal Reserve after stronger-than-expected manufacturing data pushed Treasury yields higher.

The Institute for Supply Management (ISM) said its manufacturing PMI increased to 50.3 last month, the highest and first reading above 50 since September 2022, from 47.8 in February. It suggested the manufacturing sector, which has been battered by higher interest rates, was recovering.

The Nasdaq closed slightly higher, along with the S&P 500 technology sector. An index of semiconductors jumped 1.2%.

“If the economy is still somewhat strong and now that PMI data is starting to move up, that just suggests there could be some upside pressure in yields,” said Keith Lerner, chief market strategist at Truist Wealth in Atlanta.

Benchmark 10-year and two-year Treasury yields jumped to two-week peaks following the manufacturing data.

The Dow Jones Industrial Average fell 240.52 points, or 0.60%, to 39,566.85, the S&P 500 lost 10.58 points, or 0.20%, to 5,243.77 and the Nasdaq Composite gained 17.37 points, or 0.11%, to 16,396.83.

The US rate futures market was pricing in a 58% chance of a rate cut in June, down from about 64% a week ago, according to the CME’s FedWatch tool.

“We would prefer a stronger economy with less rate cuts than a weaker economy with more rate cuts, but, on a short-term basis, the narrative has moved to about three rate cuts,” Lerner added.

Key Fed officials – Governor Christopher Waller and Atlanta President Raphael Bostic – have said their preference is for fewer than three cuts this year.

Investors will get more clarity on the US central bank’s thinking this week, with 13 of 19 Fed officials speaking.

Also, the US monthly jobs report is due on Friday.

The majority of S&P 500 sectors were lower, with real estate, healthcare, and utilities among the worst hit. The energy sector gained along with stronger crude oil prices.

Among the day’s decliners, AT&T shares slipped 0.6% after the US telecoms giant announced a massive data leak that affected current and former account holders.

Volume on US exchanges was 10.22 billion shares, compared with the 12 billion average for the full session over the last 20 trading days.

Declining issues outnumbered advancing ones on the NYSE by a 1.90-to-1 ratio; on Nasdaq, a 1.73-to-1 ratio favored decliners.

The S&P 500 posted 36 new 52-week highs and 2 new lows; the Nasdaq Composite recorded 97 new highs and 74 new lows.

(Reporting by Chibuike Oguh in New York; Editing by Anil D’Silva and Aurora Ellis)

US yields firmer as strong data trims rate cut expectations

NEW YORK, April 1 – US Treasury yields rose on Monday as stronger-than-expected manufacturing data raised doubts on whether the Federal Reserve could actually deliver on the three interest rate cuts outlined in its forecast at the last policy meeting.

Volume was light, with London closed for Easter Monday. Bond investors expect trading to pick up starting Tuesday ahead of a slew of economic data this week, such as reports on the US services sector, the Job Openings and Labor Turnover Survey (JOLTS), and US nonfarm payrolls on Friday.

US two-year and 10-year yields climbed to two-week peaks in the wake of the robust manufacturing data.

Data on Monday showed US manufacturing grew for the first time in 1-1/2 years in March, as production rebounded sharply and new orders increased. However, employment at factories remained subdued and prices for inputs pushed higher.

The Institute for Supply Management’s (ISM) manufacturing PMI increased to 50.3 last month, from 47.8 in February. March’s number was the highest and the first reading above 50 since September 2022. A reading above 50 indicates growth, while one below that level indicates contraction.

Data also showed inflation at the factory gate picked up. The survey’s measure of prices paid by manufacturers rose to 55.8 from 52.5 in February.

“The idea that the economy might be reversing itself somewhat, picking up momentum, as opposed to losing it, is gaining more traction,” said Jim Barnes, director of fixed income at Bryn Mawr Trust in Berwyn, Pennsylvania.

“And that’s where you start having a little bit of a correction in current interest rates where it’s now a coin toss as to what happens at the June meeting. If the first rate cut gets pushed off to the third quarter, then I think the market anticipates two rate cuts overall for the year,” he added.

The US rate futures market has priced in a 58% chance of a rate cut in June, down from about 64% a week ago, according to the CME’s FedWatch tool.

The market has also pared back the number of rate cuts to about two this year, from three a few weeks ago, according to LSEG’s rate probability app.

Key Fed officials — Governor Christopher Waller and Atlanta President Raphael Bostic — have expressed their preference for fewer than three cuts this year. The market will get more clarity on the US central bank’s thinking this week, with 13 of 19 Fed officials speaking.

“More and more people are starting to question the Fed’s rate outlook of three cuts because US data has been strong,” said Stan Shipley, fixed income strategist, at Evercore ISI in New York.

“Growth has been in the twos, inflation has been in the threes. That’s not what the Fed wants. I would say unless we see some weak data pretty soon here, people will start to question the June cut too,” he added.

In afternoon trading, the benchmark US 10-year yield rose as high as 4.337%, its strongest level since March 18. It was last up 13.3 basis points (bps) at 4.327%.

US 30-year bond yields advanced 12.9 bps to 4.465%.

On the shorter end of the curve, US two-year yields, which track rate move expectations, were up 9.4 bps at 4.713%. Earlier in the session, two-year yields hit 4.726%, a roughly two-week high.

The US yield curve, meanwhile, steepened on Monday, or narrowed its inversion, with the closely watched spread between 10-year and two-year US Treasury yields at minus 38.6 bps, up from minus 42.4 bps late on Thursday.

A typical predictor of recessions, the US yield curve has been inverted since July 2022.

(Reporting by Gertrude Chavez-Dreyfuss; Editing by Alexandra Hudson)

Gold pares gains as higher US dollar, bond yields weigh

April 1 – Gold prices pared gains on Monday as the dollar and bond yields rose, after the bullion surged to a fresh record high on the growing expectation that the US Federal Reserve could deliver the first interest rate cut in June.

Spot gold was up 0.3% at USD 2,238.18 per ounce as of 1:50 p.m. EDT (1750 GMT) after hitting an all-time high of USD 2,265.49 earlier in the session.

US gold futures settled 0.9% higher at USD 2,236.5.

“The view out there is that the Fed will likely start cutting rates significantly before the time we reach the 2% (inflation) target based on what we’ve seen on the PCE data,” said Bart Melek, head of commodity strategies at TD Securities.

Data on Friday showed US prices moderated in February, keeping a June interest rate cut from the Fed on the table. Fed Chair Jerome Powell said February’s inflation data was “more along the lines of what we want to see.”

Gold tends to gain when interest rates are low, which reduces the opportunity cost of holding non-yielding bullion.

Growing rate cut expectations, safe-haven demand, and central bank purchases amid geopolitical tensions have boosted gold by more than 8% this year.

However, the dollar rose 0.5% to a more than four-month peak against rivals, making gold more expensive for other currency holders, while yields on 10-year Treasury notes also climbed.

“(Fed officials) will probably caution the market that they don’t necessarily have to get aggressive on cuts. There’s no guarantee that the US central bank will start cutting rates, and I think they’ll make that quite apparent and that may cause some reversals here,” Melek added.

Bullion prices have also hit record highs in other currencies, including the euro, the yuan, the Japanese yen, the Indian rupee, and the British pound sterling.

Spot silver was steady at USD 24.96 per ounce, platinum lost 0.7% to USD 901.50 and palladium slipped 2% to USD 994.00.

(Reporting by Anjana Anil and Brijesh Patel in Bengaluru; Editing by Nick Zieminski, Vijay Kishore, and Alan Barona)

Long dollar bets explode, as funds join the dots: McGeever

ORLANDO, Florida, April 1 – Looked at through a currency market lens, the verdict from hedge funds on the recent wave of major central bank policy meetings could not be clearer – don’t bet against the mighty dollar.

The latest Commodity Futures Trading Commission data show that speculators are going ‘all in’ on a stronger dollar, particularly against G10 currencies, and especially the Japanese yen and Swiss franc.

Figures for the week through March 26 show that speculative CFTC accounts increased their net long dollar position against a range of G10 and emerging currencies to USD 13.5 billion, the highest since September 2022.

The net long position against G10 currencies was even higher at USD 17.64 billion, a level not seen since July 2022. In both cases, most of the surge has come in the last few weeks during which time the Federal Reserve, European Central Bank, Bank of Japan, and Swiss National Bank all held policy meetings.

From a relative rates perspective, the dollar has emerged as the victor. Fed policymakers lifted the median ‘dot plot’ and long-run neutral rate projections, the BOJ’s historic rate hike was deemed to be ‘dovish’, the ECB could ease policy before the Fed, and the SNB was the first major central bank to cut rates.

Even those who are more gloomy about the dollar’s longer-term prospects recognize its relative attraction in the short term.

“The bar remains high … to boost the dollar substantially, but signs of continued economic resilience in the US could still keep the greenback on the front foot in the short term,” Capital Economics senior economist Jonathan Peterson wrote last week.

YEN, SWISSIE CARRY THAT WEIGHT

Speculators appear to agree.

In the week through March 26, they increased their net short yen position to 129,106 contracts, CFTC data show. That’s close to the 132,000 contracts net short in February which was the funds’ biggest bet against the yen in over six years.

A long position is essentially a bet that an asset will rise in value, and a short position is a wager its price will fall.

Funds have increased their net short yen position in nine of the last 11 weeks, the two outliers being in the run-up to the BOJ’s historic rate hike in March.

CFTC funds’ short yen position is now worth USD 10.65 billion and the renewed bearishness is probably one of the reasons the Japanese currency last week hit a 34-year low against the dollar.

CFTC data also show hedge funds grew their net short Swiss franc position in the latest week to the largest in almost five years. It now stands at 22,627 contracts, a bet worth more than USD 3 billion – both are the highest since June 2019.

Funds also continued to reduce their net long euro position which now stands at 31,194 contracts, a USD 4.2 billion bet on the euro appreciating. Both are the smallest since September 2022.

(The opinions expressed here are those of the author, a columnist for Reuters.)

(By Jamie McGeever; Editing by Chizu Nomiyama)

Oil up 1%, US WTI at 5-month closing high, market seen tight

NEW YORK, April 1 – Crude prices edged up about 1% on Monday with US futures closing at a five-month high, on expectations that economic growth in the US and China will boost demand, while supplies tighten on OPEC+ output cuts and attacks on Russian refineries.

Brent futures for June delivery settled at USD 87.42 a barrel on Monday, June’s first day as the front month. That was up about 42 cents, or 0.5%, from the April 28 settlement price for the June contract. April 29 was the Good Friday holiday.

On April 28, the May Brent contract settled at a five-month high of USD 87.48 a barrel.

US West Texas Intermediate (WTI) crude futures gained 54 cents, or 0.7%, to settle at USD 83.71, their highest close since Oct. 27.

The US diesel crack spread, which measures refining profit margins, narrowed to its lowest since May 2023 for a second day.

In the US, manufacturing grew in March for the first time in 1-1/2 years, but employment at factories remained subdued amid “sizable layoff activity” and prices for inputs rose.

“Markets interpreted that (manufacturing data) as reducing the chances of meaningful Fed (US Federal Reserve) rate cuts, but construction was much weaker and there are a lot of jobs numbers still to come,” analysts at ING, a bank, said in a note.

Last week, US Commerce Department data showed the personal consumption expenditures (PCE) price index – the Fed’s preferred inflation gauge – largely moderated in February, with the cost of services outside housing and energy slowing significantly.

Most analysts said the moderation in the PCE price index should keep a June Fed rate cut on the table, which could boost economic growth and increase oil demand.

In China, manufacturing activity in March expanded for the first time in six months, according to an official factory survey. China is the world’s largest crude importer.

“Chinese oil demand is arguably the one missing factor outside of geopolitical headlines capable of taking oil prices to the next level,” Bob Yawger, director of energy futures at Mizuho, said in a note.

“Strong summer gasoline demand and a rebound in China oil demand could be the one-two punch that supports USD 100 a barrel,” Yawger added.

In Japan, optimism in the services sector climbed to a 33-year high in the first quarter on booming tourism and rising profits from price hikes, a central bank survey showed.

In Europe, oil demand was firmer than expected, rising 100,000 barrels per day (bpd) on the year in February, Goldman Sachs analysts said, versus a forecast for a 200,000-bpd contraction in 2024.

On the supply side, top oil exporter Saudi Arabia may raise the official selling price (OSP) in May for flagship Arab Light crude after Middle East benchmarks strengthened last month, according to industry sources.

Russian Deputy Prime Minister Alexander Novak said the country’s oil companies will focus on reducing output rather than exports in the second quarter to evenly spread production cuts with other members of OPEC+, the Organization of the Petroleum Exporting Countries (OPEC), and allied producers.

Drone attacks from Ukraine have knocked out several Russian refineries, which should reduce Russia’s fuel exports as almost 1 million bpd of Russian crude processing capacity is offline.

(Reporting by Scott DiSavino, Noah Browning, Florence Tan, and Sudarshan Varadhan; Editing by Christian Schmollinger, Kirsten Donovan, Alexandra Hudson, Barbara Lewis, Paul Simao, and David Gregorio)

Investors eye Fed rate cut, earnings as key to sustaining market rally

NEW YORK, March 29 – After a stellar start to the year for stocks, investors are on guard for potential bumps in the second quarter as they gauge whether the Federal Reserve will deliver on an expected interest rate cut by June and turn their focus on the health of upcoming earnings.

The S&P 500 ended the first quarter with a gain of more than 10%, its largest first-quarter advance since the nearly 13.1% jump in the first quarter of 2019. While so-called Magnificent Seven stocks such as chipmaker Nvidia and Facebook parent Meta Platforms META.O provided the bulk of the gains for the quarter, economically sensitive sectors such as energy and industrials have rallied over the past six weeks.

Whether the rally continues through June will likely depend on the Fed, which has not yet signaled that inflation has come down enough to justify a rate cut. Markets began January with 6 to 7 cuts priced in over the course of 2024, but are now anticipating 3 cuts after signs of resiliency in the US economy increased investor confidence in a so-called soft landing.

“The market and the Fed are finally aligned on expectations, but that puts even more pressure on every economic report that comes out because it doesn’t take a lot to make everyone run the same way,” said Joe Kalish, Chief Global Macro Strategist at Ned Davis Research. “We are expecting more volatility if we don’t see more progress on the inflation front.”

Futures markets are now implying a 61% chance of a 25-basis-point cut rate at the Fed’s policy meeting that concludes June 12, bringing benchmark rates to a range of 5 to 5.25%, according to CME’s FedWatch Tool.

Continued growth in the US economy will likely continue the recent broadening of the market rally into cyclical sectors and small-cap stocks as investors search for more attractive valuations, said Jason Alonzo, a portfolio manager on Harbor Capital’s multi-asset strategies team. The Russell 2000 index of small-cap stocks ended the first quarter with a 4.8% gain, while the S&P 500 industrials sector rose nearly 11% over the same time.

“Right now the only thing the market cares about is whether the Fed remains in control even if the economy re-accelerates,” Alonzo said. “If that idea was upset somewhat and the Fed had to imply that rate hikes were back on the table, that would be a shock to investors and cause a real issue for all assets.”

Economic readings next week, including ISM manufacturing data, ISM services, and the closely watched non-farm payrolls report, which economists polled by Reuters expect to show a growth of 198,000 jobs in March.

Investors should not be surprised if the market rally starts to slow as the Fed nears a potential rate cut, noted Sam Stovall, chief investment strategist at CFRA Research. Since 1989, the S&P 500 has gained an average of 15.5% between the last rate hike of a cycle and the first rate cut, but gained an average of just 5.4% in the six months following the first rate cut, he said.

Still, strong momentum in the first quarter has historically carried over to the following quarter, said Keith Lerner, Co-Chief Investment Officer at Truist Advisory Services. Of the 11 times that the S&P 500 has posted a total return of 10% or more in the first quarter, the market continued to advance in the second quarter 9 times, with an average gain of 6.2%, he said.

“The market deserves the benefit of the doubt and at this point, we think bull market rules apply,” Lerner said. The biggest risk to a continued rally would be a sign that the Fed is considering keeping rates at current levels through the end of the year, which would lead to “dramatic” repricing of risk assets, he said.

The likelihood of a market slowdown will also depend largely on corporate earnings, which came in surprisingly robust and helped push the S&P 500 to a series of record closing highs despite the market repricing interest rate policy, said Emily Roland, Co-Chief Investment Strategist at John Hancock Investment Management.

S&P 500 earnings grew at a 10.1% pace in the last quarter of 2023, more than double the 4.7% expected advance, according to LSEG. High interest rates will likely weigh on consumer and corporate spending, with analysts expecting a 5.1% earnings growth over the first quarter. Companies begin reporting results in earnest the second week of April.

“If earnings continue to surprise to the upside, the Fed will have a hard time justifying 3 cuts this year,” Roland said. “But if we see a leveling out of inflation this economic re-acceleration could turn into something more sustainable.”

(Reporting by David Randall)

Japan’s Nikkei posts biggest point gain for fiscal year

TOKYO, March 29 – Japan’s Nikkei share average ended higher on Friday, driven by chip-related heavyweights, and posted a record fiscal-year gain in terms of points amid heavy foreign buying.

The index hit successive record highs this month, after breaking levels on Feb. 22 last seen in 1989 during the country’s bubble economy.

The rally was supported by foreign buying on a weaker yen and the expectation that the Bank of Japan would stick with a loose monetary policy.

The index rallied 12,328 points in the fiscal year ending on Friday, marking its biggest gain on an absolute basis. It rose 44% in the year, the most since the financial year ended March 2021.

On Friday, the Nikkei ended up 0.5% at 40,369.44, recouping some of the previous session’s losses.

“Investors remain cautious over a possible intervention in the currency market but overall they take the weak yen as a positive factor for domestic stocks,” said Fumio Matsumoto, chief strategist at Okasan Securities.

The yen fell to a 34-year low against the dollar this week, prompting local authorities to hold an emergency meeting, a sign Tokyo is moving closer to intervening in the market.

The Japanese yen was last flat at 151.40 per dollar.

Chip-related Tokyo Electron 8035.T and Advantest rose 0.79% and 1.85%, respectively.

The property sector jumped 1.96%, adding 16% this month, the most among sectors. The sector has been underpinned by a government survey released this week that showed land prices in the country rose at the fastest pace in 33 years in 2023.

Optimism that the Bank of Japan will not raise interest rates rapidly supports their stock prices, Okasan Securities Matsumoto said.

The broader Topix rose 0.61% to 2,768.62 on Friday.

(Reporting by Junko Fujita, additional reporting by Noriyuki Hirata; Editing by Mrigank Dhaniwala and Subhranshu Sahu)

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