Amidst slow business, the 25-day moving average is exerting pressure and affecting the trend.
This week, the Nikkei average fell by 218.09 yen (0.56%) to 38,596.47 yen on a weekly basis. At the beginning of the week, there were concerns of a rise of extreme right-wing parties in the French lower-house elections, which led to a sharp drop in the Nikkei average due to European political instability. The wide range of stock prices, including high-tech stocks, fell, and the Nikkei average plummeted into the 37,000 yen range. After that, as the political instability in Europe subsided, buying back gradually occurred, offsetting the initial decline. However, with a lack of significant trading materials, active trading was reserved, and Prime Market's trading volume hit its lowest point of the year at 3.17 trillion yen, resulting in dull transactions throughout the week. The Nikkei average is in a position of being held back by the 25-day moving average.
As for investment trends in the second week of June, foreign investors sold 269.4 billion yen worth of spot transactions, sold 64.5 billion yen worth of TOPIX futures, and bought 382.1 billion yen worth of 225 futures, making a total net purchase of 48.2 billion yen. On the other hand, individual investors made net purchases of 106.1 billion yen, including a net purchase of 97.5 billion yen worth of spot transactions. Meanwhile, trusts slightly bought 15.57 billion yen worth of spot transactions.
JPX Research Institute announced the TOPIX review proposal.
This weekend's US stock market is mixed. The Dow Jones Industrial Average closed at 39,150.33, up 15.57 points (+0.04%) from the previous day, while the Nasdaq index closed at 17,689.36, down 32.23 points (-0.18%), and the S&P500 closed at 5,464.62, down 8.55 points (-0.16%). The Nikkei 225 futures in the night session of the TSE closed at 38,490 yen, down 110 yen from the normal trading closing price.
The trading volume in the prime market in June remained in the 3 trillion yen range on many days. During this period, the Nikkei average was in a narrow range of around 38,500 yen ± 700 yen, and the market continued with a trend of "no selling in the quiet market." The Nikkei average is steady due to the fact that there is no significant selling, but it is expected to lack direction in the market due to the summer doldrums.
On the other hand, JPX Research Institute proposed a new reform plan for TOPIX on June 19, and large stocks, such as McDonald's Holdings Japan Ltd. (2702) and Harmonic Drive Systems Inc. (6324) from the Standard Market and Ceres Inc. (2782) from the Growth Market, which are expected to be included in the plan, saw an increase in buying. The total number of constituent stocks will be reduced by 40% from approximately 2,100 current stocks to 1,200 stocks, and around 50 stocks combined from the Standard Market and the Growth Market are scheduled to be included. As for existing stocks included in the Prime Market, there may be a possibility of exclusion, creating a negative reaction for the supply-demand relationship.
However, the weight reduction of stocks undergoing transition will be implemented in stages over the next two years beginning in October 2026, so the effects will be limited. For now, it is a stimulus for the Standard Market and the Growth Market, and the Tokyo market is showing a positive reaction.
Japan has been placed on the currency manipulation watch list for the first time in a year.
As of June 21, the dollar-yen exchange rate has reached 159 yen and 84 sen, with the trend of a weaker yen and stronger dollar continuing. On June 20, the US Treasury Department released its biannual foreign exchange policy report, adding Japan to its "monitoring list" to watch for currency manipulation. It has been a year since it was added to the list. The reason for this was that the total current account surplus in 2023, which was the target period for this time due to the recent decline in crude oil prices, exceeded the formal standard. There was no wording criticizing Japan's foreign exchange intervention from April to May this year. However, with the addition to the monitoring list, it may be slightly more difficult for the government and the Bank of Japan to intervene in the foreign exchange market.
On the 21st, Finance Minister Kanda made a comment that warned against excessive exchange rate fluctuations, saying, "Excessive exchange rate fluctuations have a negative impact on the economy," and that appropriate measures will be taken if there are excessive fluctuations in the exchange rate. At the same time, he also said, "The US foreign exchange report does not criticize Japan's approach." While this is true, considering that Treasury Secretary Yellen has put the kibosh on Japan's foreign exchange intervention, it is believed that vigilance regarding government and Bank of Japan yen-buying intervention has eased. With the possibility that speculative funds may pile up short yen positions, it is conceivable that the trend of a weaker yen and stronger dollar may accelerate, which would have a tailwind effect on stocks with high overseas revenue ratios.
The US PCE deflator for May will be announced on the 28th.
In Japan, the corporate services price index for May, the business conditions index for April, retail sales and department store/supermarket sales for May, unemployment rate and active job openings ratio for May, June Tokyo consumer price index (CPI), and mining and manufacturing production for May are scheduled for next week. Overseas, New Zealand's trade balance for May, Germany's IFO Business Climate Index for June, S&P/CoreLogic CS20 Composite-20 HPI for April, Conference Board Consumer Confidence Index for June, Richmond Fed Manufacturing Index for June, Australia's CPI for May, Germany's GfK Consumer Confidence Index for July, US new home sales for May, weekly crude oil inventory, Germany's retail sales for May, the Swedish central bank's policy interest rate announcement, Eurozone business climate for June, Turkey's central bank's policy interest rate announcement, US weekly initial jobless claims, wholesale inventory for May, GDP (final values) for the first quarter, durable goods orders for May, existing home sales contract index, and the Michigan University Consumer Sentiment Index (final value) will be announced on the 27th next week.
Overseas, on the 24th, NZ's May trade balance, Germany's June IFO business climate index, on the 25th, the US's April S&P/CoreLogic CS20 City Home Price Index, June Conference Board Consumer Confidence Index, June Richmond Fed Manufacturing Index, on the 26th, Australia's May CPI, Germany's July GfK Consumer Confidence Index, the US's May new home sales, weekly crude oil inventories, on the 27th, Germany's May retail sales, Sweden's central bank announces policy interest rates, Eurozone business climate in June, Turkey's central bank announces policy interest rates, weekly initial unemployment claims in the US, May wholesale inventories, Q1 GDP (final), May durable goods orders, existing home sales index, on the 28th, UK's Q1 GDP (revised), current account balance, Canada's April GDP, US's May PCE deflator, June Chicago purchasing managers' index, and University of Michigan's consumer sentiment index (final) are scheduled.