On Tuesday, most major Asian stock markets finished the trading session in negative territory, even as a strong rally unfolded on Wall Street one day earlier, driven by falling global oil prices that calmed persistent investor concerns over rising inflation. The downturn across much of Asia came as regional market participants continued to assess the long-term implications of the recent coordinated currency intervention carried out jointly by the United States and Japan to shore up the weakening Japanese yen.
Japan’s benchmark Nikkei 225 index slipped 0.6% to close at 63,369.85, as the U.S. dollar edged slightly higher against the yen, rising to 157.63 yen from 157.18 yen in previous trading. The euro saw barely any movement against the dollar, holding at $1.1511 compared to $1.1514 from the prior session. Before the joint intervention, the dollar had traded as high as the 160-yen mark, a level that triggered policymakers’ action to reverse the yen’s steep decline.
Market analysts remain divided over the long-term effectiveness of the intervention, with many pointing out that the action fails to address the core economic drivers behind the yen’s slump, including divergent inflation trends, a wide gap in interest rates between the U.S. and Japan, and the relative uneven strength of the two nations’ economies.
A research report from BMI, a division of Fitch Solutions, noted that a coordinated intervention backed by the United States carries far greater symbolic signaling power than an intervention carried out by Tokyo alone. The report added that the public pledge of additional future action is likely to make currency speculators pause before betting further against the yen, but any large-scale sustained contribution from U.S. authorities will probably be limited in scope.
Matthew Ryan, head of market strategy at global financial services firm Ebury, offered a more optimistic take, arguing that the latest joint intervention signals a genuine shift in monetary policy stances rather than just a one-off defensive move. He called the development “historic and meaningful” for the yen, adding that it materially improves confidence in his firm’s prediction that the yen will see moderate gains in coming months.
Across other regional markets, South Korea’s Kospi index ticked down by less than 0.1% to 6,254.76. Australia’s S&P/ASX 200 bucked the regional downtrend, climbing 1.2% to close at 9,128.60. Hong Kong’s Hang Seng index fell 0.5% to 25,881.99, while mainland China’s Shanghai Composite slipped 0.2% to 3,802.61.
On Monday, U.S. stocks notched strong gains after easing oil prices helped ease investor fears that inflation would accelerate further. The broad S&P 500 jumped 1.5%, ending the day just 0.1% below the all-time record it set earlier this summer. The Dow Jones Industrial Average, which tracks 30 large U.S. corporations, gained 693 points or 1.3% to hit a new all-time closing high, while the tech-heavy Nasdaq composite rose 2.1%.
In early Asian energy trading on Tuesday, benchmark U.S. crude added 50 cents to reach $80.84 a barrel. Brent crude, the global benchmark for oil pricing, rose 63 cents to $84.40 a barrel. A day earlier, Brent prices fell after former U.S. President Donald Trump announced over the weekend that he would delay planned military strikes against Iran, following urging from regional allies. Over the past month, Brent crude prices swung wildly between $72 and $102 a barrel, as market sentiment shifted back and forth over escalating tensions in the Middle East and uncertainty around when oil tankers would be able to resume safe transit through the Persian Gulf to deliver crude to global markets.
The yield on the 10-year U.S. Treasury note fell to 4.68% from 4.75% recorded late Friday, but it remains well above the 3.97% level seen before the outbreak of military tensions with Iran.