Japan’s Nikkei 225 recovers from 1.5-year lows

Today’s headlines

What’s happening: Japanese stocks recovered sharply this morning, sending the Nikkei 225 higher by around 6%.

What happened: The Nikkei 225 had declined to a one-and-a-half low during Monday’s session, as investors remained concerned about US President Donald Trump’s tariff threats.

Markets in Japan received support this morning from the upbeat performance of US tech stocks.

Why it matters: Last week, US President Trump had announced 34% tariffs on China and 24% on Japan. In response, China announced plans to impose a reciprocal 34% tariff on all imports from the US starting Thursday.

Trump retaliated to the move by threatening a new 50% tariff on Chinese goods unless Beijing withdraws its retaliatory tariffs. China’s Commerce Ministry said it opposes fresh tariff threats from the US President and said the country would take further measures to safeguard its interests.

Trump expressed his willingness to meet with Japanese officials to begin trade talks after a phone call with Prime Minister Shigeru Ishiba.

Markets also received support from upbeat data from Japan, as the country’s current account surplus reached a record high. Japan’s current account surplus widened to ¥4,060.7 billion in February, from ¥2,737.1 in the year-ago month. The latest reading topped market expectations of ¥3,800 billion.

Shares of chipmaker Tokyo Electron surged more than 8% while Advantest’s stock climbed around 11% this morning. Banking stocks also recorded gains, with Mitsubishi UFJ Financial Group and Mizuho Financial Group adding 12% and 13%, respectively.

All industry sub-indices moved higher, with the banking index recording the biggest gains, jumping around 11%.

Japan’s Nikkei 225 index climbed more than 5.7% to 32,921.10 this morning, while the broader Topix added 6.2% to reach 2,431.07 this morning.

Other Asian stock markets also opened on a strong note, after recording losses in the previous session. Hong Kong’s Hang Seng Index rose 1.7% after dipping more than 13% to record its biggest single day nosedive since 1997 on Monday.

What to watch: Investors will continue monitoring tariff-related announcements from the US President.

Data on bank lending (0350 UAE Time), consumer confidence (0900 UAE Time) and machine tool orders (1000 UAE Time) will be released on Wednesday. Analysts expect Japan’s total value of loans to rise 3.1% year-over-year in March. Markets expect Japan’s consumer confidence index to decline to 34.7 in March, from 35.0 in February. Japan’s machine tool orders, which surged by 3.5% year-over-year to ¥118,125 million in February, are expected to increase by 0.5% in March.

The markets today

The Canadian dollar in focus today ahead of Ivey PMI data

Context: The CAD/USD forex pair moved higher this morning amid strength in crude oil prices.

Details: Data released on Friday showed Canada’s employment declined by 32,600 in March, recording the first decline since January 2022 and missing market estimates of a 12,000 gain. The unemployment rate in Canada increased to 6.7% in March, after hitting a three-month low in the previous month. The figure came in-line with market estimates.

Higher prices of crude oil, one of Canada’s major exports, lent support to the loonie. WTI crude oil prices jumped 1.4% to trade at $61.52 a barrel this morning.

Weakness in the US dollar also provided a boost to the CAD/USD forex pair this morning. The US dollar index, which measures the greenback’s performance versus a basket of major peers, fell around 0.3% to 102.99.

The CAD/USD pair gained around 0.5% to 1.4180 this morning.

What to watch: Investors await the release of economic data on Canada’s Ivey PMI (1800 UAE Time) today. The Ivey Purchasing Managers Index in Canada, which jumped to 55.3 in February versus 2020-low of 47.1 in the previous month, is expected to decline to 53.2 in March.

The Bank of Canada is scheduled to review policy on April 16, which is also expected to impact the CAD/USD forex pair ahead.

Other Markets: European indices closed lower on Monday, with the FTSE 100, DAX 40, CAC 40 and STOXX Europe 600 Index down by 4.38%, 4.13%, 4.78% and 4.50%, respectively.

The news shaping the markets

Ukraine is looking to send a team of negotiators to the US this week for discussions on access to its rare earth mineral deposits. The news sent the RUB/USD pair lower in forex trading this morning.

Australia’s NAB business confidence index fell to -3 in March, from -2 in the previous month. This being the lowest reading since last November 2024 exerted pressure on the AUD/USD forex pair.

Ireland’s BNP Paribas Real Estate Construction PMI rose to 53.9 in March, from 48.7 in the previous month. This being the first expansion in the construction sector in three months sent the EUR/USD pair higher in forex trading this morning.

South Korea’s current account surplus widened to $7.18 billion in February, from $6.86 billion in the year-ago month. The region recording a surplus for the tenth consecutive month lent support to the KRW/USD forex pair.

Philippines’ unemployment rate increased to 3.8% in February, from 3.5% in the year-ago month. However, the PHP/USD pair rose in forex trading this morning.

What else to watch today

US NFIB business optimism index (1400 UAE Time) and Redbook index (1655 UAE Time), Brazil’s gross debt to GDP (1530 UAE Time), nominal budget balance (1530 UAE Time), car production (1800 UAE Time) and new car registrations (1800 UAE Time), as well as Turkey’s treasury cash balance (1830 UAE Time).