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the asia-pacific market is changing very quickly!

the asia-pacific market, which was still weak yesterday, rebounded strongly today. the nikkei 225 index rose by more than 3.5% at one point and closed up 3.4% at 36,833.27 points. the taiwan weighted index closed up 3%. the major hong kong stock indices and the south korean stock indices all rose by more than 1%. at the same time, the currencies of asia-pacific countries that were strong yesterday fell across the board, and the negative correlation between exchange rates and equities has been relatively obvious recently.

so, what is the logic behind this? first, from the perspective of the rising structure, the surge in the philadelphia semiconductor index last night has led to a stronger trend in chips and consumer electronics in the asia-pacific market today. second, from an economic perspective, japan's producer price index rose 2.5% year-on-year in august, lower than the expected 2.8% and 3% last month. the data is one of the key indicators closely watched by the bank of japan, which has hinted at further interest rate hikes in the coming months. however, naoki tamura, a member of the bank of japan's board of directors, said that the pace of interest rate adjustments depends on prices and economic conditions. the bank of japan will not necessarily raise interest rates in 2024, and the timing of the rate hike cannot be predicted.

a wave of waves

if we say that nvidia saved the u.s. stock market last night, then we can also say that it saved the asia-pacific market today.

on september 11, nvidia founder jensen huang said at the goldman sachs technology conference in san francisco that the demand for nvidia's latest blackwell chips was too strong, which led to tensions with customers and they were working hard to resolve the situation. this shows that the popularity of ai chips remains high. the stock surged by more than 8% last night, directly driving the philadelphia semiconductor index to soar.

today, the asia-pacific market opened, and the stock indexes of related markets also exploded. as of the close, the weighted stock price index of the taiwan stock exchange closed up 3% at 21,653.25 points. hon hai precision rose 4.7%.

the nikkei 225 index rose by more than 3.5% at one point and closed up 3.4% at 36,833.27 points. the topix index closed up 2.4%. semiconductor-related stocks tokyo electron rose by nearly 5%, advantest rose by 9%, and renesas electronics rose by 3.47%. softbank group owns shares in chip design company arm, which rose by more than 8%.

south korea's kospi index rose by more than 2%, small-cap kosdaq rose by 3%, sk hynix rose by more than 8%, and samsung electronics rose by nearly 2%. at the same time, the hong kong stock hang seng technology index, hang seng index and state-owned enterprise index all rose by more than 1%. overall, major markets in the asia-pacific region were almost all in the green.

in contrast, in today's foreign exchange market, after yesterday's early trading frenzy, the exchange rates of asia-pacific countries began to fall, especially the yen exchange rate. the us dollar against the yen has already broken away from its lows and rebounded significantly today. it is worth noting that this happened under the hawkish remarks of relevant japanese officials. obviously, the equity market is still greatly affected by the yen exchange rate trend.

market instability

in fact, the recent market is not very stable. rise and fall are often caused by certain remarks, rather than determined by the fundamentals of companies and industries. this often means that before the us dollar rate cut, various market expectations are full of instability. the reasons for this instability come from three aspects: first, due to the previous excessive trading of rate cuts, the market is at a high valuation and some funds have a need to cash out; second, rate cuts may bring about changes in the price of carry funds, such as the yen carry trade may be reversed; third, as the demand for external macroeconomics weakens, the economic fundamentals are also in an unstable state.

from a technical perspective, the yen's performance is the most critical. there is an analysis that the market expects the fed's rate-cutting cycle to start more slowly than previously expected, but this will not prevent the yen from strengthening against the dollar. japan's six-month swap rate is almost back to the level after the bank of japan's last rate hike, indicating that the market believes that there will be almost as many rate hikes in the next six months as then. therefore, it may not be a coincidence that the yen hit a 2024 high on wednesday, and the correlation between the yen and the six-month swap rate is the highest in many years.

the slight rebound in the u.s. cpi core monthly rate has led traders to reduce their bets on the fed's rate cuts, and now traders only believe that the fed will cut interest rates by 25 basis points in september. however, the total rate cuts priced into the u.s. in this round of easing cycle have increased, and the market believes that the fed will cut interest rates by a total of 244 basis points in the nine meetings until september next year. all of this means that the yen will continue to rise against the dollar even if the interest rate gap between the two countries will continue to widen in the coming months.

however, the bank of japan and some japanese financial officials' comments do not make the expectations clear. hawkish bank of japan member naoki tamura said on thursday that interest rates must be raised to at least 1% by the end of next year, reinforcing the bank's determination to normalize monetary policy. this is the first time that the bank of japan's policymakers have publicly stated their interest rate targets. the possibility of the bank of japan's 2% inflation target continues to approach, which means that interest rates must be raised to a neutral level for the economy around the end of 2025.

he also said that interest rates need to be raised in a timely and gradual manner. the current market view on the interest rate path is a gradual rate hike. the interest rate will be adjusted based on the certainty of the price target. it is necessary to raise interest rates by examining the economy and inflation. the bank of japan will not necessarily raise interest rates in 2024, and the timing of the rate hike cannot be predicted.

yesterday, junko nakagawa, a member of the bank of japan's board of directors, said that if the economy and prices perform in line with expectations, the bank of japan will continue to adjust the degree of easing of the policy environment. this was an important reason for the huge fluctuations in the japanese market that day.

on the other hand, it is clear that the market has high hopes for artificial intelligence. it seems that only the rapid development of artificial intelligence can break the situation of the global economy falling into a downturn. therefore, the rise of artificial intelligence last night not only drove the us stock market, but also prompted the major asia-pacific stock markets to collectively counterattack today. artificial intelligence is undoubtedly an important industrial trend, but whether there are twists and turns in the process is also worth observing.