The Japanese stock market has witnessed a significant surge, reaching a new 34-year peak. This development comes amid a global backdrop of cautious central bank policies and shifting market sentiments.
Growth in global oil consumption over the past two years has been driven by economic growth and a return to pre-pandemic travel patterns, especially for international flights. We expect global oil consumption to increase by 1.4 million b/d in 2024 and 1.2 million b/d in 2025, both slightly below the pre-pandemic 10-year average (2010-19).
Source: Matteo Marchetti, KTM Market Analyst
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The Japanese stock market is witnessing remarkable growth, with the Nikkei index reaching a 34-year high. This surge is attributed to a combination of factors, including the Bank of Japan’s (BOJ) ongoing relaxed monetary policy and a global shift of investment interest away from China. Investors, who have been historically underweight in Japanese assets, are now increasingly turning towards Japan, recognising its growing potential in the global market.
Contrasting the Japanese market, Chinese stocks are experiencing a downturn. The People’s Bank of China’s (PBOC) decision to keep its policy steady, especially after avoiding expected rate cuts, has led to dissatisfaction in the market. Blue-chip stocks in China have stumbled to a five-year low, sparking concerns and speculation about the government’s intervention to stabilise the market.
The weakening of the Japanese yen has been a critical factor in fuelling the Nikkei’s rally. The yen’s decline has made Japanese exports more competitive, attracting a significant influx of offshore funds. Investors are encouraged by the BOJ’s stance to maintain its ultra-easy monetary policy, at least until the annual wage negotiations conclude in the spring.
The European Central Bank (ECB) faces varied market expectations regarding its upcoming policy decisions. While some analysts predict a more dovish approach, the market is still uncertain about the ECB’s direction, especially in terms of interest rate cuts and its handling of inflation.
The US dollar is experiencing a cautious rally, influenced by mixed signals regarding the Federal Reserve’s rate cut plans and recent economic data. The market’s uncertainty is reflected in the dollar’s performance, as it navigates through the expectations of the Federal Reserve’s policy and the global economic outlook.
Nothing of note today – with major news to follow this week, including: