Global stock markets rose sharply to welcome the Bank of Japan to raise interest rates.
Today, on Monday, Japan’s stock market changed from last week’s decline to a rise-the gloom of the decline of Japan’s stock market and the rise of the yen exchange rate was swept away by two major factors: "Spring Fight" and the expectation of the Bank of Japan to raise interest rates.
On March 18th, the Nikkei average closed up 2.67% to 39,740.44 points, approaching the previous high of 40,472.11 points. The Dongzheng Index closed up 1.92% to 2,721.99 points.
Among the constituent stocks, Toyota Motor, with the largest market value, rose by 2.26%, and Mitsubishi Corporation, with Buffett’s position, rose by 3.39%. In the chip sector, Tokyo Electronics, the leading company in chip manufacturing, rose by 3.76%, Edwin Test, the global leader in chip testing, rose by 3.88%, and Socionext, a chip design company, rose by as much as 8.14%. In addition, Uniqlo’s parent company Fast Retailing Group rose by 4.73%.
In addition to the Japanese stock market, Asian stock markets generally rose today. A shares reversed last Friday’s decline and relayed at low altitude. Among them, the Growth Enterprise Market Index rose by 2.25%, while the Shenzhen Component Index and the rising Composite Index rose by 1.46% and 0.99% respectively.
In Europe and America, as of press time, the three major European indexes all rose, with France CAC40 and Germany DAX approaching the previous high. The US Nasdaq 100 futures rose 0.6%, while NVIDIA, Tesla, Google and other stocks rose more than 2% before the market.
Today and tomorrow (March 18 ~ 19) are the interest rate meeting of the Bank of Japan (BOJ) that attracts much attention. Previously, BOJ had repeatedly released news that it would raise interest rates by 0.1 percentage points at this meeting, thus ending the negative interest rate policy that lasted for eight years.
The interest rate hike is just around the corner, and the stock market is soaring. The relationship between the two seems to be counter-common sense.However, for Japan, which is shrouded by the "lost 30 years" and long-term negative interest rates, this interest rate hike seems to indicate that the economic recovery has finally seen hope, and this boost to the confidence of the economy and even the stock market is far greater than the interest rate increase of 0.1 percentage point.
In addition, the results of the just-concluded "Spring Fight" show that the average wage increase in Japan is 5.28%, which is the highest wage increase since 1991.This shows that enterprises are optimistic about the future prospects and end the wage policy of austerity that has been maintained for decades.
Paradigm transformation
The Nikkei News called this "Spring Fight" an important "paradigm shift".That is, Japanese employers who have always been cautious have finally stopped saving money on wages. This new trend emerged after three decades of low inflation and nominal wage growth.
"Spring Fight"The full name is "Spring Life Struggle" or "Spring Collective Negotiation", that is, the labor movement initiated by the Japanese working class in order to raise wages and improve working conditions every spring.
Previously, Japanese companies have been focusing on controlling labor costs in order to survive in global competition. But today, the situation has reversed. If Japanese companies don’t pay attractive wages, they will not be able to attract high-quality workers ….. and if they don’t attract outstanding talents, they will not be able to survive in international competition.
On March 7th, Rengo, Japan’s largest labor union, demanded an average wage increase of 5.85%, the biggest increase since 1993. It marks a major shift in Rengo’s approach. In previous decades, Rengo avoided making radical wage demands for fear of hurting employers. (Because if the employer goes bankrupt in order to provide employees with high wages, employees and trade unions will lose more than they gain.)
In the just-concluded "Spring Fight" negotiations, Toyota Motor Corporation, Japan’s largest auto company and Japan’s listed company with the highest market value, raised the employee’s bonus from 6.7 months’ salary in the previous year to 7.6 months’ salary, making it the highest annual bonus in history.
In addition, according to different positions, the monthly salary of Toyota employees will increase by a maximum of 28,440 yen (about 1,387 yuan). After Toyota’s salary increase strategy was determined, other car companies followed suit.
At present, Nippon Steel, which is bidding for American steel companies, is more aggressive in proposing a monthly salary increase of 35,000 yen (about 1,667 RMB), with an increase of 14%, far exceeding the 30,000 yen demanded by the trade union.
Last Friday, Rengo said that the preliminary statistics of the negotiation results showed that its member unions had won an average wage increase of 5.28%, which was the biggest increase since 1991, although it was not up to the target of 5.85%.
The sustained recovery of Japan’s economic environment and the upward trend of Japanese government bond yields have caused the Bank of Japan to face the urgent need to raise interest rates. The Bank of Japan, which has always been cautious, has repeatedly communicated with the market before, saying that it will raise interest rates at the interest rate meeting in March.
Before this rate hike, the Bank of Japan had not raised interest rates for 17 years. The Bank of Japan stressed that if we want to break this continuity, we will not necessarily tighten the control of the money supply, but only reduce the stimulus. Even after the possible interest rate hike, monetary policy will remain loose.
"Good or bad" interest rate hike
Why is the impact of this interest rate hike on the Japanese stock market and even the global market not only negative, but very positive? Even the global stock market rose sharply to welcome Japan’s interest rate hike?The author believes that the impact of interest rate hikes on the stock market is positive and negative. In this sense, raising interest rates can be divided into good interest rates and bad interest rates.
"Bad interest rate hike"It is a rate hike that has to be carried out in order to curb the further rapid rise of prices in the case of high prices and rampant inflation. Similar to the violent interest rate hike started by the Federal Reserve in 2022, it belongs to this kind of "bad interest rate hike". In this process of raising interest rates, if the economy can maintain growth, the economy will overheat; If economic growth slows down or even fails to grow, there will be economic stagflation.
The impact of this interest rate hike on the stock market is negative. In 2022, the US stock market experienced a sustained downward trend rarely seen in history, which was the result of this "bad interest rate hike".
but"Good interest rate hike"It is the interest rate increase in order to match the interest rate level with economic growth when the economic prospect is expected to be positive, or the result of stimulating the economy with low interest rates has been achieved. This interest rate hike is not to curb inflation, but to confirm the future economic growth prospects.
Japan’s interest rate hike this time belongs to this kind of "good interest rate hike".
Similar situations in history, such as the Federal Reserve’s interest rate hike in 2016. At that time, the oil price was more than 30 dollars (the lowest was 26 dollars), and there was no inflation; The global economy experienced the subprime mortgage crisis in the United States in 2008, the European debt crisis that lasted for many years after 2010, and the persistent geopolitical conflict in 2014-15, and finally saw the dawn of economic recovery in 2016, so raising interest rates at that time was equivalent to confirming the improvement of economic prospects.
In 2017, there was a beautiful year of coordinated recovery and prosperity of the global economy. In 2017, the Federal Reserve raised interest rates four times, and none of the global stock markets fell. The Hang Seng Index rose by 35% in the whole year.
Recently, the Bank of Japan said that with the rise of interest rates, the previous bond purchases to maintain the structural balance of the yield curve will also be cancelled.In 2023, the Bank of Japan purchased nearly 11.4 billion yen of 10-year Japanese government bonds to keep its yield below 1%. Up to now, the Japanese government bonds held by the Bank of Japan have accounted for half of its national debt issuance.
However, Bank of Japan Governor Kazuo Ueda said that BOJ would continue to buy bonds if the yield of government bonds soared with the interest rate hike. . .
Coordinated recovery
Generally speaking, the just-concluded "Spring Fight" and the upcoming meeting of the Bank of Japan to discuss interest rates may be an important turning point of the Japanese economy in recent decades, which will mean that the "lost 30 years" of the Japanese economy is coming to an end.
This has a far-reaching positive impact on the global economy and capital market.
Looking around the world, the latest CPI and PPI data released by the United States in February, as well as the data of non-agricultural employment population, all have the characteristics of "exceeding expectations". Although they are in a downward trend on the whole, the rate of decline is slow. Although this will cause certain variables in the expectation of the Fed’s interest rate cut, we should also see its positive factor, that is, the resilience of the US economy. After all, if the economic recession, in order to stimulate the economic restart and have to implement interest rate cuts, that is the big killer.
In addition, the latest CPI data released by China turned positive year-on-year and quarter-on-quarter, which is also a major positive factor for the global economy. After all, the pessimistic expectation of "negative inflation", which was generally worried from the media to the investment community, has been alleviated to some extent. If China’s economic recovery is maintained, China will also withdraw from the monetary easing policy in the next few quarters.
China, the United States and Japan are the top three economies in the world. If, at the current pace, Japanese negative interest rates end, China emerges from "negative inflation" and American economic data show resilience, the long-awaited coordinated global economic recovery is expected to come in the near future in 2024.
Based on this, what else can we be pessimistic about the stock market?
This is probably the reason why the US stock market wants to fall hard recently, the Japanese stock market rises sharply and welcomes interest rate hikes, and A shares and the Hang Seng Index relay at low altitude and continue to exert their strength.
This article comes from: Zhitong Finance APP