The G7 Strikes Back Against the Yen

Don't let it get away!

Keep track of the stocks that matter to you.

Help yourself with the Fool's FREE and easy new watchlist service today.

It's been a wild ride across the Pacific this week. From a tense standoff of words at the G7 meeting, to surprising comments from Japan's economy minister, the land of the rising sun keeps pushing forward in its goals of economic progress. Investors didn't get much of a break this week -- the Nikkei (NIKKEIINDICES: ^NI225  ) lost 0.6% this week, including a troubling 1.2% drop on Friday alone. But, based on what's coming out of Japan, it seems like they might not have much longer to wait.

Japan vs. the world
Japanese economy minister Akira Amari first stirred things  up on Saturday. Amari noted that, while promoting monetary easing and private sector investment remained core tenants of the new Japanese government, helping stock prices climb in the near future is also a goal. He particularly singled out promoting the Nikkei to the 13,000 mark -- around 2,000 points higher than it is now -- by the end of the fiscal year on March 31.

That's a good deal for investors alright, but other advanced economies are starting to grow worried with Japan's aggressive economic steps. At a meeting of the G7 this week -- a group of the leading developed economies in the world -- leaders moved to clamp down on suspicions  of a rising "currency war" over growing inflation. However, one official claimed statements had been intended as a warning to Japan's bold moves with the yen, sending the currency roaring higher  against the dollar and the euro on Tuesday.

That certainly wasn't what Japanese economic leaders wanted.

A strong yen hurts Japanese automakers like Toyota (NYSE: TM  ) and Honda (NYSE: HMC  ) particularly hard, because of their heavy focus on exports. Both stocks plunged lower on Tuesday, and each ended the week in the red. Shares of Toyota fell an ugly 2.7%, while Honda lost a more modest 1.9%. Both Honda and Toyota are betting on a weaker yen to stimulate sales, although the former didn't raise its outlook  for the year like the latter did in the most recent round of earnings releases.

If Japan's serious about pulling up stocks, however, it should be a boost to major financials in the third-largest economy -- something shareholders of Nomura Holdings (NYSE: NMR  ) and Mizuho Financial Group (NYSE: MFG  ) can appreciate. It's been a tale of two stocks to start the year for these companies -- Nomura has lost 6.4% so far in 2013, while Mizuho has skyrocketed to gains of 16.6% to kick off the year. If the Nikkei can keep up its gains, however, and Japan makes good on its promise to spur private investment, both should continue soaring higher. Over the past three months, each of these stocks has posted strong double-digit gains.

The Nikkei's been on a tear to start the year, outperforming many other world indices. Japan's not the only overseas locale you can win in, however; profiting from our increasingly global economy can be as easy as investing in your own backyard. The Motley Fool's free report, "3 American Companies Set to Dominate the World," shows you how. Click here to get your free copy before it's gone.

Read/Post Comments (0) | Recommend This Article (4)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

Be the first one to comment on this article.

Compare Brokers

Fool Disclosure

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 2259819, ~/Articles/ArticleHandler.aspx, 9/30/2016 6:34:59 PM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...

Today's Market

updated Moments ago Sponsored by:
DOW 18,308.15 164.70 0.91%
S&P 500 2,168.27 17.14 0.80%
NASD 5,312.00 42.85 0.81%

Create My Watchlist

Go to My Watchlist

You don't seem to be following any stocks yet!

Better investing starts with a watchlist. Now you can create a personalized watchlist and get immediate access to the personalized information you need to make successful investing decisions.

Data delayed up to 5 minutes

Related Tickers

9/30/2016 2:30 AM
^NI225 $16449.84 Down -243.87 -1.46%
Nikkei 225 CAPS Rating: No stars
HMC $28.92 Up +0.09 +0.31%
Honda Motor CAPS Rating: ****
MFG $3.36 Up +0.02 +0.60%
Mizuho Financial G… CAPS Rating: **
NMR $4.45 Up +0.08 +1.83%
Nomura Holdings CAPS Rating: ***
TM $116.06 Up +0.07 +0.06%
Toyota Motor CAPS Rating: ***