The Nikkei average posted a large rebound, closing the morning session at 38,476.33 yen, up 556.78 yen (+1.47%) from the previous day, with a rough estimate of 0.980 million shares traded.

The U.S. stock market rose on September 30th. The Dow Jones Industrial Average closed at $42,330.15, up 17.15 points (+0.04%), while the Nasdaq rose 69.58 points (+0.38%) to 18,189.17, and the S&P 500 ended trading at 5,762.48, up 24.31 points (+0.42%). The unexpected improvement in the September Chicago Purchasing Managers' Index led to dominant buying sentiment. However, Chairman Powell of the Federal Reserve Board (FRB) hinted at a slight rate cut pace, causing a temporary shift to significant selling due to disappointment. Nasdaq was unnerved by the rise in long-term interest rates but Apple's gains provided support, helping the market recover to positive territory towards the end. Month-end, combined with optimistic views from the chairman amidst adjustments at the end of the quarter, fueled buying expectations for a soft landing, pushing the Dow higher and setting new record highs daily.

The Tokyo market started trading on a buy side following the rise in U.S. stocks and the slight relief in the strong yen trend. The Nikkei average recovered the 38,000 yen level from the previous significant decline. The buying momentum continued to slowly expand. In the morning, early rate hike expectations receded following the major opinions expressed at the Bank of Japan's BOJ monetary policy meeting on September 19-20. The exchange rate briefly advanced to the 144 yen per dollar range as the yen weakened and the dollar strengthened, providing material for large-cap stock buybacks.

In Nikkei average constituent stocks, defense-related stocks such as Kawasaki Heavy Industries <7012>, Mitsubishi Heavy Industries <7011>, IHI <7013>, and Nippon Steel <5631> were generally bought, while trading companies such as Mitsui & Co <8031>, Sumitomo Corporation <8053>, Itochu Corporation <8001>, and Marubeni <8002> also rose. In addition, TDK <6762>, Fujikura <5803>, and Nitto Denko <6988> rose, while semiconductor stocks such as Renesas Electronics <6723> and Tokyo Electron <8035> were also bought.

On the other hand, yen-benefiting stocks such as Nitori Holdings <9843>, ZOZO <3092>, Nichirei <2871>, and Sapporo HD <2501> were generally sold off, while railway stocks such as Odakyu <9007>, Tokyu <9005>, JR Tokai <9022>, and Keio Electric Railway <9008> declined as the listing of Tokyo Metro was again recognized with its arrival in October. In addition, China-related stocks such as Shiseido <4911> and Fanuc <6954> were also sold.

By industry sector, machinery, wholesale trade, securities and commodity futures trading, electric appliances, and insurance were bought, while air transportation, land transportation, pulp and paper, textiles & apparels, and steel were sold.

In the Bank of Japan's September 'Tankan' short-term economic survey of enterprises, the Business Conditions DI for large enterprise manufacturers showed no change from the previous June survey (+13), staying at +13. In the wake of the recovery in IT market conditions, semiconductor-related industries saw growth, with electric machinery improving by 10 points to +11. As this was nearly in line with market expectations, the impact on the exchange rate and the stock market was limited.

The afternoon Nikkei average seems to be in a standoff around the 38,500 yen level. Avoiding downside searches due to the temporary relief of the strong yen, there is a strong desire to ascertain the direction of the Ishiba administration, leading to a restrained buying of a wide range of large cap stocks mainly by foreign investors.