World shares saw mixed results on Monday, after confirmation from the U.S. and Japan that they had intervened to support the Japanese yen against the U.S. dollar. Concurrently, oil prices dropped significantly following U.S. President Donald Trump’s announcement that U.S. forces would abstain from attacking Iran, suggesting nearby resolution of Middle Eastern conflicts.
Despite a previous indication of frustration with negotiations, Trump had warned that the U.S. military was poised for fierce action against Iran. The dollar fell close to 155.20 yen when Trump, along with Japanese officials, confirmed intervention efforts aimed to check the dollar’s ascent to a 40-year peak against the yen, which had approached 164 yen last week.
By late Monday in Tokyo, the exchange rate was at 156.68 yen per U.S. dollar. A weaker yen bolsters the profit margins of Japanese corporations with substantial international operations, enhancing their value in yen. Furthermore, it has attracted numerous foreign tourists who benefited from increased purchasing power in Japan. However, a cheap yen diminishes Japan’s overall purchasing power, escalating costs for importing oil and other vital commodities.
The dollar’s strength is attributed to its role as a refuge during uncertain situations, such as wartime. Trump praised the dollar’s fortitude, observing that a weaker dollar could enhance competitiveness for U.S. exports. Analysts indicated that the U.S. Treasury acquired yen via the Federal Reserve Bank of New York to enhance its value. Stephen Innes from SPI Asset Management commented that Washington was actively supporting Tokyo in defending the yen.
The euro declined to $1.1527 from $1.1549.
International Market Movement
European markets saw shifts with Germany’s DAX increasing by 1.3% to 25,963.51, while Paris’s CAC 40 experienced a 1% rise to 8,596.56. Britain’s FTSE 100 was nearly stable at 10,861.95. Futures showed an upward trend with the S&P 500 rising by 0.5% and Dow Jones Industrial Average futures climbing 0.6%.
In Asia, Japan’s Nikkei 225 index decreased by 0.9% to 63,754.90, and South Korea’s Kospi dropped by 5.1% to 6,257.45. On Friday, Kospi surged 17.9% for its most substantial gain in history following substantial earlier losses. Samsung Electronics and SK Hynix, key players in the index, experienced share hikes surpassing 25% on Friday but fell by 8.8% on Monday.
Hong Kong’s Hang Seng index recorded a 0.5% increase to 26,009.40, whereas the Shanghai Composite index decreased by 0.6% to 3,809.66. Australia’s S&P/ASX 200 saw a 0.2% gain to 8,996.90. Taiwan’s Taiex rose 0.6% and India’s Sensex advanced by 0.8%.
The easing of Middle Eastern hostilities prompted Brent crude oil, the global benchmark, to drop 4.7% to $83.92 per barrel. U.S. benchmark crude declined 5.6% to $79.89 per barrel.
U.S. Stock Market Trends
U.S. stocks rebounded to close a tumultuous July for Wall Street. The S&P 500 increased by 0.7%, the Dow industrials rose 0.5%, and the Nasdaq composite rallied 1%. Market volatility was driven by surging oil prices amid the conflict with Iran and heightened concerns over the profitability of major tech’s investments in artificial intelligence technology and potentially inflated chipmaker values.
The S&P 500 achieved its first winning week in three weeks, fueled by Amazon’s remarkable market performance. Amazon jumped 15.3% after revealing substantial profit growth in the latest quarter, surpassing analyst predictions. The profit surged beyond triple from the previous year due to accelerated expansion in its cloud computing sector.
Associated Press reporters Mayuko Ono and Mari Yamaguchi in Tokyo contributed to this report.