EBC Markets Briefing | Global investors begin to shun Japan amid yen rout

Asian shares hovered around 15-month highs on Tuesday. Japan's Nikkei was flat as the10-year JGB yield edged closer to 1%.

The benchmark index peaked above 40,000 in late March before a sharp fall stemming from recalibrated US rate cut bets. The yen’s weakness is turning foreign investors away from Japanese stocks.

For dollar-based investors, the gains of the Nikkei shrink to just above 3%, far below the S&P 500’s return of around 10%. That has disappointed FOMO investors and Buffett disciples.

The Nikkei holds above the key 38,000 psychological handle after breaking below the rising wedge. The support at 50 SMA has become a resistance.

Wall Street held steady overnight within a whisker of record peak. The biggest US tech stocks are not only a bet on innovation but also a possible hedge against inflation, according to the latest Bloomberg survey.

Those multinationals’ extensive sway over the US economy allows them to generate steady profits, stoking rallies that makes investors confident that they will continue to ratchet up.

Nvidia, for example, has surged more than six times since inflation first rose past 2% in March 2021. Still, growth stocks are sensitive to interest rates as their valuations hinge largely on future profits.

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