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Toyoaki Nakamura, a dovish member of the Bank of Japan's board, emphasized the need for caution in adjusting monetary easing in light of the economic recovery. Speaking in Hiroshima, he highlighted the importance of carefully assessing a wide range of data before making any decisions, suggesting that a rate hike this month may not have unanimous backing.
Stocks surged as rate cut expectations grew, with the S&P 500, Nasdaq, and Dow reaching record highs. Bitcoin approached $100,000, reflecting positive investor sentiment. Meanwhile, Brent crude futures rose 0.2% to $72.42 a barrel, and gold prices steadied at $2,649 an ounce. Asian markets showed mixed results, with Japan's Nikkei climbing 0.6% to a three-week high, while Hong Kong faced selling pressure.
Warren Lichtenstein, known for his aggressive takeover attempts in Japan during the mid-2000s, is contemplating a return to the Japanese market after over a decade. This potential move reflects significant shifts in Japan's corporate landscape, where shareholder activism has gained traction and companies are increasingly receptive to unsolicited bids. Recent changes in corporate governance and takeover guidelines further enhance the environment for investment, making Japan attractive for investors seeking to unlock value in undervalued companies.
Japanese stock markets are poised for growth, with UBS projecting a 5% upside by 2025, driven by local demand and improving economic conditions. However, increased U.S. tariffs under President-elect Trump pose risks, particularly for export-oriented firms. UBS recommends focusing on domestic sectors like retail, housing, and IT services, while cautioning that political instability could impact economic stability.
Asian stocks rose in response to gains in the US market, while the yen strengthened to around 150 per dollar. Expectations for a Bank of Japan interest rate hike diminished following a report questioning the likelihood of an increase. Meanwhile, South Korea's won fell as officials called for calm after a surprising martial-law decree.
Market expectations for a Bank of Japan interest rate hike this month have significantly decreased, with the likelihood dropping to 40% from 66% in late November, following a local media report that raised doubts about an increase. As a result, the yen remains under pressure, trading weaker than the critical 150 per dollar level, despite recovering some losses after a 1.1% decline on Wednesday.
Global stocks reached a record high following Jerome Powell's optimistic remarks on the US economy, which bolstered risk assets. While Asian shares rose, US equity futures remained stable after gains in major tech stocks. In Europe, the euro faced challenges amid political turmoil in France, and market expectations for a Federal Reserve rate cut later this month persisted.
Royal Bank of Canada exceeded analyst expectations with Q4 adjusted earnings per share of $3.07 and revenue of $15.1 billion. In South Korea, President Yoon Suk Yeol rescinded his martial law declaration amid political turmoil, facing potential impeachment. Seven & i Holdings Co. plans a $60 billion buyout that includes an IPO for its North American assets, while Dollarama aims to expand in Western Canada with a new logistics hub. Foot Locker shares fell 19% after missing earnings expectations and announcing store closures.
Rio Tinto plc, a leading global mining company, reported 2023 production figures with iron ore at 290.2 Mt (62.5%), aluminum and related products at 65.4 Mt (22.2%), and copper at 562.4 Kt (5.9%). The company’s sales are heavily concentrated in China (59.6%), followed by the United States (13.9%) and Japan (6.9%).
UBS has rated Rio Tinto 'Neutral' with a target price of 5250 pence. The company is a leading mining firm, with 2023 net sales primarily from iron ore (62.5%), followed by aluminium, alumina, and bauxite (22.2%), and smaller contributions from copper, industrial minerals, gold, and diamonds. Geographically, 59.6% of net sales come from China, with additional sales in the US, Japan, and Europe.
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