On September 26, 2023, the Nikkei share average in Japan ended the day more than 1% lower. This decline was largely due to a drop in chip-related shares, as concerns grew about rising U.S. Treasury yields.
The Nikkei index closed down 1.11% at 32,315.05, with growth shares particularly affected by the increase in U.S. Treasury yields. Takehiko Masuzawa, the trading head at Phillip Securities Japan, noted that investor concern about rising yields was weighing on growth shares.
Meanwhile, in India, the Sensex was also experiencing fluctuations. Jindal Steel & Power saw a rise of 2.5% to Rs 130.5 after receiving an upgrade from ratings agency Moody’s Investors Service. The outlook for the company was changed to stable from positive.
On the other hand, the Indian rupee weakened against the U.S. dollar, tracking its Asian peers. The rupee was at 83.2250 against the U.S. dollar, nearing key support levels. This weakening was largely due to elevated U.S. Treasury yields, which were at their highest level since October 2007.
In the Indian bond market, yields rose as U.S. Treasury yields reached fresh highs. The 10-year benchmark bond yield was at 7.1698%, reflecting the impact of rising U.S. yields on investor appetite for local papers.
In other stock market news, Gland Pharma received an Establishment Inspection Report (EIR) from the U.S. FDA, indicating the closure of an inspection. Nuvama Wealth Management, the demerged entity of Edelweiss Financial Services, was listed on the NSE but fell 5% as investors looked to book profits.
Looking globally, the U.S. dollar reached a 10-month high against a basket of major currencies, supported by U.S. bond yields scaling 16-year peaks. This stronger dollar weighed on gold prices, which drifted lower as investors awaited more data for clues about the Federal Reserve’s rate policy.
Overall, there are conflicting forces influencing the market trend, with positive indicators such as the strength of the Indian economy and good corporate earnings balanced against negative global cues. The sustained selling by foreign institutional investors, along with rising U.S. yields, has created caution among investors. However, long-term investors may see this as an opportunity to buy high-quality stocks in financials, capital goods, and autos.
It remains to be seen how these factors will play out in the near-term, but market participants are advised to monitor the ongoing developments and make informed decisions based on the available information.