By Kosaku Narioka


Japanese stocks fell and long-term government bonds rose Monday after U.S. and Japanese authorities signaled that they are ready to step in to support the yen, sparking a rebound in the currency.

Japan's Nikkei Stock Average was recently down 2.1%, dragged lower by declines in exporters such as automakers and electronics manufacturers. Honda Motor fell 4.1%, Nissan Motor dropped 3.9% and Panasonic Holdings slid 5.3%.

A stronger yen reduces the value of overseas profits in yen terms. The currency was trading at 153.93 against the dollar on Monday, compared with 155.72 late Friday in New York and 158.66 at the close of Tokyo's stock trading on Friday.

The yield on the 10-year Japanese government bond fell 1 basis point to 2.245% as the yen's appreciation eased concerns about higher import costs and reduced expectations of a near-term interest-rate increase by the Bank of Japan. The 20-year yield was down 3 basis points at 3.160%. Bond yields fall when prices rise.

The yen rebounded back from its recent slide after the Federal Reserve Bank of New York, at the direction of the Treasury Department, contacted potential trading counterparties on Friday for so-called rate checks, The Wall Street Journal reported, citing people familiar with the matter. Rate checks are inquiries about available pricing and can precede direct intervention in currency markets.

In Japan, officials have warned for months about the currency's weakness and have said the government will take necessary measures against speculative and excessive moves.

"The cat-and-mouse game with the yen is likely to carry over," Marc Chandler, chief market strategist at Bannockburn Capital Markets, said in a note. "But the one-way market has been broken, at least for the time being."

U.S. involvement is entirely plausible, Brown Brothers Harriman said in a note, adding that Treasury Secretary Scott Bessent had voiced concerns about the selloff in Japanese government bonds and its spillover into the U.S. Treasury market.

The dollar was weaker against other major currencies, including the euro and the British pound, as well as against some other Asian currencies such as the Malaysian ringgit and the Indonesian rupiah.

The Malaysian currency breached the 4.00 threshold against the dollar, marking its strongest level since 2018. Support for the ringgit has been driven by increased bond-market inflows amid strong exports and economic growth, analysts said. It was recently trading at 3.9681 to the dollar.

Stock markets elsewhere in Asia were mixed. Malaysia's KLCI rose 1.1%, South Korea's Kospi fell 0.8% and Hong Kong's Hang Seng index edged up 0.1%.

Meanwhile, gold climbed above the $5,000-per-ounce mark for the first time, and silver rose to a fresh all-time high, driven by growing fears of a potential partial U.S. government shutdown and ongoing geopolitical uncertainty in the Middle East.

Spot gold rose to a record high of $5,093.19 an ounce, ICE data showed. Spot silver also hit a new peak of $109.448 an ounce.

China's Shanghai Composite gained 0.1%, Taiwan's Taiex added 0.4% and Singapore's Straits Times Index was down 0.3%.


--Ronnie Harui and Ying Xian Wong contributed to this report.

Write to Kosaku Narioka at kosaku.narioka@wsj.com


(END) Dow Jones Newswires

01-26-26 0049ET