Markets: Japan led global stocks in May

As a new trading month begins, Yahoo Finance's Jared Blikre breaks down market movement on the first day of June. Blikre also breaks down Japan's stock market, which outperformed rivals in May.

Video transcript

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- Welcome back. We're at the start of a new month on Wall Street. Let's get right over to Yahoo Finance's Jared Blikre over at the New York Stock Exchange to set the stage for us. Jared.

JARED BLIKRE: That's right. We're starting the month of June on a down beat. I'm looking at the YFi Interactive, not huge hemorrhaging losses here. But the Dow is down about half of percent. And I guess you could say the NASDAQ is outperforming today because it is a slightly less negative than the Dow.

And I should mention that we just closed a month when the NASDAQ was up over 5% and the Dow was negative. In fact, it was down over 3%. That is only the third time, I believe, in the last three-- or two decades that this has happened. It happened once in June of 2021, and then you'd have to go back to the dot com bubble. So these are very unusual times that we're looking at here. Just want to highlight that first.

Now, in terms of sector action, we're seeing communication services catch a little bit of a bid. That's XLC in the upper left, that's in green. And then followed by materials and industrials. Those are the only sectors in the red. And then we've got utilities. That is in the red for about 8/10 of a percent, guys.

BRAD SMITH: Jared, thanks so much for continuing to track all that. Also, the rally in the Nikkei is catching the eye of investors worldwide. And our very own Julie Hyman says Japan Inc is doing a phenomenal job in today's "Morning Brief," she said that. And the nation's benchmark index recently hit a 33-year high, leaving the S&P 500 in the dust. And foreign investors, they're impressed and eager to get in on the action.

As the Fed tightening comes to a close, the dollar is expected to drop, making developed international markets, Japan in particular, an appealing alternative to US stocks for more globally focused investors. So let's get back to Yahoo Finance's Jared Blikre at the New York Stock Exchange for a closer look at this. Jared.

JARED BLIKRE: Great outline there. And we can get into the history in a minute, but I want to go to the YFi Interactive again, where I'm showing the Nikkei 225. And this is an index that famously peaked in 1989. That was the all-time high. And it is dangerously close to eclipsing that today. Now, you can see year-to-date, it's up 20%. That is just shy of the NASDAQ zone performance of about 23%. But in fact, it does trounce the S&P 500's performance.

Now, here is a max chart, and you can see, here is our peak in 1989. That was a real estate bubble back then. Japan itself was in a bubble. And guess what? That was the last time we saw huge inflationary pressures in Japan.

For all the talk about yield curve control, they've gotten their eye off the ball a little bit. Markets have gotten away from them. But they have the highest inflation rate. And I think that's contributing to a lot of the mania and speculation in Japanese stocks.

You throw in the fact that, yes, they have curtailed a lot of the graph, a lot of the corruption since 2015, and that's been more embedded in their culture. But all in all, this has been a prime environment for the Japanese stocks to soar.

And I just want to show a tale of two different markets here. That was Japan. Now, I want to look on the YFi Interactive at Hong Kong, China. A totally different story. You take a look at the year-to-date, we were talking about headlines, last week, of the Hang Seng dipping into bear market territory. You take a look at this three-year chart, it has been in a bear market for a number of years. So China, Japan, very much a dichotomy there, guys.

- Thank you, so much once again, Jared Blikre.