Japanese Markets Struggle as Yen Surges and Bonds Suffer

According to Yahoo News, Japanese markets faced significant challenges on Friday, with the Nikkei experiencing its largest weekly drop since October, bonds taking a hit, and the yen surging towards its biggest weekly gain in five months. Investors have been rapidly exiting bets on Japanese rates remaining low. MSCI's broadest index of Asia-Pacific shares excluding Japan rose by 0.5%, while the Nikkei fell by 1.6% for a weekly drop of 3.3%. The yen saw a leap of over 2% on Thursday and remained well supported on Friday, trading at 143.39 per dollar. Bank of Japan Governor Kazuo Ueda informed parliament on Thursday that the central bank is facing an 'even more challenging' year ahead before discussing options for exiting its ultra-easy settings. This statement was interpreted by traders as a sign of change on the horizon. The Bank of Japan is set to establish policy rates on December 19th. Japan's bond market continued to struggle, with the 10-year government bond yield rising almost 15 basis points in two sessions to 0.79%. In other market news, the Nasdaq finished 1.4% higher after a 5.3% jump for Google parent Alphabet, as markets celebrated the launch of its latest AI model. Australian gas producer Santos saw its shares rise by 6% following news of potential merger talks with larger rival Woodside. Meanwhile, Brent crude futures reached a five-month low before recovering slightly to $75.02 a barrel in Asia trade, and Bitcoin is eyeing an eighth consecutive weekly gain on expectations that U.S. interest rates have peaked and anticipation of a potential bitcoin ETF approval.