【Fujitomi】Nikkei average stalls as concerns grow over geopolitical risks and futures selling tied to Nikkei linked bonds redemption
The Nikkei Stock Average ended trading at 19,900 yen 09 sen, up 57 yen 09 sen (0.29%) from the previous day. After passing major risk events and amid growing expectations of a June rate hike in the United States, buying surged on hopes for improved corporate earnings driven by a yen depreciation and dollar appreciation trend. The Nikkei initially rose by about 95 yen in the morning, but later showed a heavier upper limit, possibly due to concerns over North Korea. The trigger was Sky News reporting that North Korea’s Ambassador to the United Kingdom, Choi Il, stated that a sixth nuclear test would be conducted. In addition, some investors seemed to be increasingly wary of heavy futures selling associated with early redemption of the Nikkei-linked bonds. Some market observers also believe that, combined with private placements and public offerings, Nikkei-linked bonds could reach around 1 trillion yen in total, around the 20,000 level, raising concerns about futures selling pressure related to early redemption.
TOPIX also rebounded, closing at 1,585.19 points, up 3.42 points (0.22%). The trading value on the Tokyo Stock Exchange First Section was 2 trillion 7790 billion yen, and the trading volume was 2,169,890,000 shares. The number of advancing issues on the First Section was 1,044, declining issues 805, and unchanged 166.
