Bank of Japan Governor Ueda remains hawkish! The NY Dow index, which raised interest rates, has soared to an all-time high!

The stock market has experienced heavy rain, then clear skies, and then cloudy with occasional rain. In early August, the stock market was hit by a fierce "summer storm" (Bank of Japan and Ueda shock). It is called the "Reiwa Black Monday," but that's not accurate.

However, it has since rebounded strongly. The Nikkei Average (on market basis) hit a low of 0.03 million 1156 yen on August 5. The decline from the all-time high of 0.04 million 2426 yen on July 11 was 0.01 million 1270 yen, a decrease of 26.6%. It's quite a drop.

In terms of the charts, it completely collapsed. A large lower shadow formed. Surprisingly, it rose to 0.03 million 8408 yen on August 22. The increase was 7252 yen, a rise of 23.5%. It has recovered 64.3% of the decline. The rebound is fast. Some market participants are even saying that the next step is a full recovery.

It's a fierce rebound. The background behind this is the unwinding of the yen carry trade, which was caused by the interest rate hike and resulted in a stronger yen. There was also a mechanical selling due to systematic trading strategies. Of course, there were also short-term sellers in margin trading. As it was a sharp and sudden drop, the adjustment was done in an instant.

However, the problem lies ahead. Investors must recover from the damage caused by the crash.

Now, let's talk about the factors behind the strong rebound. The slightly modified monetary policy of the Bank of Japan's hawkish stance, as seen in Vice Governor Uchida's speech on August 7, played a major role (though Governor Ueda's hawkish stance remains unchanged).

They sell and make a profit, they buy and make a profit. It is ultimately a tactic to aim for profit. They perform large-scale executions and engage in high-frequency trading. The high volatility expands investment opportunities.

Furthermore, the decline rate in the recent financial market turmoil of the NY Dow was only 7% (later recovering to the highest level in history). Well, you could say that it is a market that lacks interest for speculators.

In any case, the crisis has been averted. In the future, it is likely to be a development focused on politics (LDP leadership election on September 27th, US presidential election on November 5th), as well as the financial policies of Japan and the United States, and the movement of the exchange rate (yen/dollar).

Basically, value consolidation will be necessary. In terms of trends, the Federal Reserve (FRB) will lower interest rates, and the Bank of Japan will tighten monetary policy (raising interest rates, absorbing liquidity). It cannot prevent the strengthening of the yen.