The auction of Japanese 20-year Treasury bonds held on Tuesday saw record demand for the bonds, with their high yields increasing their appeal to investors.
Bloomberg reported that the offering coverage rate was 5.84 times the offering value, while the coverage rate in the previous auction was 4.01 times, and the average coverage rate over the past 12 months was 3.73 times.
In another sign of increased investor interest in Japanese bonds, the difference between the highest yield requested by investors and the lowest yield decreased to 0.07 points, compared to 0.15 percentage points last month.
This comes as long-term Japanese bond yields recently approached their highest levels in decades, in light of a global selling wave of Treasury bonds, driven by escalating tensions in the Middle East and rising oil prices, which increased concerns regarding inflation and general financial conditions.
Earlier this month, the yield on 20-year Japanese Treasury bonds reached levels not recorded in three decades, while the yield on 30-year bonds reached a record high level.
This rise in bond yields reflects ongoing concerns about Japan's financial prospects; Investors are awaiting the method that Japanese Prime Minister Sanae Takaichi will adopt to finance her plan to reduce the sales tax on food and soft drinks, without increasing pressure on the country’s public finances.
Takaichi sought to allay market concerns, stressing that her government aims to build a strong economy and achieve financial sustainability, while pledging to manage Japanese government bond issuances appropriately within the budget for the next fiscal year.
Another major test for Japanese bonds will come when the Bank of Japan's monetary policy board meets to review interest rates next week. While markets widely expect interest rates to be stabilized, investors are awaiting the press conference of the Central Bank Governor after the end of the council meeting.
Nasdaq 100 futures fell on Tuesday, under pressure from renewed weakness in shares of companies related to artificial intelligence and a rebound in oil prices, at a time when investors are preparing for the release of business results from major technology companies.
CoreWave shares fell by 3.1 percent, and Nebius Group shares fell by 2.9 percent during pre-market trading, while Apple shares fell by 1 percent, and Nvidia shares fell slightly, according to Reuters.
These losses came after a temporary recovery on Monday, when the Standard & Poor's 500 and Nasdaq indices rose, as investors returned to buying technology stocks after a sharp sell-off in the markets last week, driven in part by concerns related to CoreWave's debt burden and the costs of financing the expansion of artificial intelligence infrastructure.
Ion Jorge, an analyst at Active Trades, said: “I see that what is happening is a decline within a selective market, and not a real opportunity to buy artificial intelligence shares, nor the beginning of a deeper re-evaluation of prices.”
He added: “Investors have become more selective in dealing with companies working in the field of artificial intelligence compared to what they were a year ago.”
In a related context, shares of the South Korean company Ellis Group, which works in the field of artificial intelligence infrastructure, fell by about 30 percent in its first trading on the stock exchange, falling below the price of its initial public offering, after the company raised 201.1 billion won ($151.12 million) from the offering.
By 5:20 a.m. EDT, Dow Jones Industrial Average futures were up 115 points, or 0.22 percent, while S&P 500 futures were down 6.75 points, or 0.09 percent, and Nasdaq 100 futures were down 147.75 points, or 0.5 percent. The hundred.
In energy markets, Brent crude futures rose by 1.7 percent to about $111 per barrel, approaching their highest levels in five months, with traders factoring in a geopolitical risk premium in prices.
Investors' attention is now turning to companies' business results this week, searching for indicators that demonstrate the ability of technology companies to maintain strong growth in light of escalating macroeconomic risks.
SpaceX and Netflix are scheduled to announce their quarterly results after the market closes on Tuesday, while Meta Platforms and Tesla will announce their results on Wednesday.
General Motors, Hasbro, Halliburton, and 3M are also expected to announce their results before the markets open on Tuesday.
“3M” shares rose by 3.9 percent, after the industrial group announced the expansion of its commercial relations with “Amazon” and the issuance of the right to purchase shares for one of “Amazon’s” subsidiaries, allowing it to purchase ordinary shares in “3M” worth more than $521 million.
On the other hand, shares of Steel Dynamics fell by 6.3 percent, after its profits in the third quarter fell below analysts’ estimates.
