In the afternoon of October 1st, attention should be paid to the following 3 points in the trading session.

- The Nikkei Average rebounded significantly, with the excessive caution against the Ishiba administration easing as the yen strengthens.

- The dollar-yen pair stayed steady, while Japanese stocks rebounded.

Australia's May retail sales: +0.6% (MoM estimate: +0.3%, April: +0.1%).

■ The Nikkei Average rebounded significantly, with the excessive caution against the Ishiba administration easing as the yen strengthens.

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.

The dollar-yen is slightly firm, while Japanese stocks rebound.

In the morning of the 1st, the dollar-yen was slightly firm in the Tokyo market, rising from 143.39 yen to 144.15 yen. The Nikkei average stock price opened with strength and is inclined to be affected by yen selling due to risk preference. In addition, the firm movement of the US 10-year bond yields is strengthening dollar buying.

The trading ranges so far are: dollar-yen 143.39-144.15 yen, euro-yen 159.75-160.57 yen, euro-dollar 1.1127-1.1143 dollars.

Check stocks for the afternoon session

・Issues such as Ishin <143A> and Itami Art <168A> triggered the daily price limit with 6 stocks.

*Includes temporary stopper (indicated price)

Australia's May retail sales: +0.6% (MoM estimate: +0.3%, April: +0.1%).

Economic indicators and remarks by important people

[Economic indicators]

・Japan's job openings-to-applicants ratio in August: 1.23 times (Forecast: 1.24 times, July: 1.24 times)

・Japan's unemployment rate in August: 2.5% (Forecast: 2.6%, July: 2.7%)

・Japanese September Bank of Japan Short-Term Economic Survey of Enterprises Large Manufacturers Business Conditions DI: +13 (Estimate: +12, June: +13)

・Japanese September Bank of Japan Short-Term Economic Survey of Enterprises Large Non-Manufacturers Business Conditions DI: +34 (Estimate: +32, June: +33)

・Japanese September Bank of Japan Short-Term Economic Survey of Enterprises Total Industry Capital Expenditure: Year-on-year +10.6% (Estimate: +11.9%, June: +11.1%)

・Australian August Retail Revenue: Month-on-month +0.7% (Estimate: +0.4%, July: +0.1%←0.0%)

[Important Person's Remarks]

-Minister of Finance Suzuki

"Concerned about the negative impact of the weak yen"

"Balancing economic growth and fiscal reconstruction is crucial"

Main opinions at the Bank of Japan monetary policy meeting (September 19-20).

"If the inflation outlook is achieved, adjusting the degree of easing, the financial market continues to be unstable.

"Considering a gradual rate hike path towards the 1.0% level in the second half of FY 2025.

"At the present time, it is not desirable to have additional interest rate requests that suggest a substantial tightening.

"If there are no significant negative changes in the outlook, a rate hike is desirable without delay.

New Zealand Ministry of Finance

"Suggesting that we are at or near the bottom of the economic cycle.

"Improvement in corporate and consumer expectations for inflation easing, start of interest rate decline, and future conditions."

Not applicable.

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