Nikkei at its highest level since 1996 – BBH

Analysts at BBH note that the Nikkei rose for the eighth consecutive session and now is at its highest level since 1996 and this advance brings the Nikkei to a solid if not spectacular 9.6% rise for the year.  

Key Quotes

“Japanese stocks have been helped by the global rally and growing confidence that Abe and the LDP will win the snap election later this month.”  

“The MOF will provide new data tomorrow, but we note that in the last week of September, the most recent data, foreign investors snapped a nine-week streak in which they were net sellers of Japanese shares. Year-to-date, foreign investors have sold $17 bln of Japanese and it all took place in Q3 and most of that (~$15.5 bln) in September.”  

“The best indicator of the dollar-yen exchange rate remains the 10-year US yield.  The correlation of the percentage change of the two over the past 60 days (0.81) appears to be the highest since at least the mid-1980s.  After peaking at 2.40% before last weekend, the yield slipped to 3.32% earlier today.  The dollar is trading inside yesterday's range against the yen, which is inside Tuesday's range.  The 20-0day moving average is found near JPY112.30.  The dollar has not closed below this average since September 11.  On the other hand, it has not closed above its five-day moving average (~JPY112.55) in a week.”  

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