Top Nikkei 225 Index catalysts this week: yen rescue, Softbank earnings and more

The Nikkei 225 Index retreated by over 1.52% on Monday as investors reacted to several events, including the Japanese yen rescue and the upcoming corporate earnings. It dropped to 63,390, down by 12.9% from its peak this year. This article highlights some of the top catalysts for the index this week.

Nikkei 225 Index to react to Japanese yen rescue

The Nikkei 225 and Topix indices retreated as the Japanese yen gained steam. Data shows that the USD/JPY exchange rate dropped to 155.25, its lowest level since May 6 this year, and 5.35% from its highest point this year. 

It has slipped in the last three consecutive days, a trend that escalated after the US intervened. According to the FT, this is the first time in decades that the Federal Reserve has intervened. It did that by swapping billions of euros to Japanese yen. The BoJ also spent over $50 billion in currency interventions last week.

A stronger yen has some major impacts in Japanese companies. For example, large importers benefit by making it cheaper to buy and ship their products to Japan. On the other hand, exporters like Toyota and Honda are usually hurt as the stronger currency makes its products more expensive.

The BoJ may decide to hike interest rates later this year as recent data showed that inflation remains at an elevated level. Odds of a rate hike happening in October rose to 48%. Such a hike would help to bridge the gap with the US. 

Top Japanese companies to publish their earnings

The Nikkei 225 Index will react to several important corporate earnings this week. Mitsubishi UFJ Financial, one of the country’s biggest banks, will publish its earnings on Monday. Mitsubishi and Marubeni, two of the largest sogo shoshas will also release their numbers today. 

More large companies like Toyota Motor, Mitsui, Mitsubishi Heavy Industries, and Daikin will release their numbers on Tuesday. Nintendo, Nippon Telegraph & Telephone (NTT), and Softbank will release their results on Thursday, while Recruit and Japan Post will release on Friday. These earnings will provide more information about the state of corporate Japan amid the ongoing US-Iran war.

In addition to these companies, hundreds of important American companies will also release their numbers. The most notable ones are firms like Advanced Micro Devices (AMD), Palantir Technologies, Caterpillar, SanDisk, Western Digital, and Eli Lilly. Historically, these American companies normally have an impact on Japanese firms.

BoJ minutes and US nonfarm payrolls data

The Nikkei 225 Index will also react to the upcoming Bank of Japan minutes that comes out on Wednesday. These minutes will provide more information about the last meeting and what officials discussed. 

Japan will also react to several macro data points, including the overtime pay metrics and household spending. At the same time, the US will release the latest nonfarm payrolls numbers, which will show how the economy is doing. US numbers are important because of their impact on the Federal Reserve.

The Nikkei 225 Index will also react to the ongoing developments between the US and Iran. Donald Trump paused his rumored attacks during the weekend after interventions by Saudi Arabia, Qatar, and other countries. As a result, crude oil prices dropped on Monday, with Brent and the West Texas Intermediate (WTI) moving to $83 and $80, respectively.