In the morning session on the 25th, the following three points should be noted.

Focus on determining the stability around 38,000 yen in the market trend.

Canon reports a 14.4% increase in operating profit in the third quarter to 296.6 billion yen.

Key points in the morning session: Toyoda Gosei, quadrupling firearm production for fiscal year 2025, contributing to defense capability enhancement.

Focus on determining the stability around 38,000 yen in the market trend.

On the 25th, the Japanese stock market, with the upcoming House of Representatives election, is likely to have a cautious approach to active trading, but the Nikkei average stock price seems to focus on determining its stability around 38,000 yen. On the 24th, the U.S. market saw the NY Dow drop by 140 points, while the Nasdaq rose by 138 points. IBM and Honeywell, which announced earnings below expectations, pushed the NY Dow down, while Tesla and Lam Research were bought due to better-than-expected earnings, causing S&P 500 and Nasdaq to rise, showing significant impact from individual earnings. Additionally, with U.S. initial jobless claims coming in below expectations, indicating the solid performance of the labor market, a portion of economically sensitive stocks were bought. Chicago Nikkei 225 futures settlement price saw a decrease of 70 yen compared to Osaka, standing at 38,090 yen. The yen is trading around 151.70 yen to one U.S. dollar.

The Nikkei average stock price is likely to start with a slightly bearish tone, adjusting to the Chicago futures market, but the impact of major U.S. companies' earnings is significant, so the decline in the NY Dow is not a major concern. Conversely, while Tesla's rise in after-hours trading was already anticipated, the sudden increase of over 20% in regular trading might draw further attention as a significant development. Moreover, the material impact of Lam Research surpassing expectations resulted in a rise of over 5%, potentially providing strong support for high-tech stocks in the index.

However, given the upcoming House of Representatives election, a cautious stance is likely to prevail. Recent news reports suggest that the ruling party may fall below the majority. If they do fall below the majority, there could be increased downward bias due to selling pressure from foreign investors wary of political risks affecting indexes. On the other hand, if the ruling party maintains the majority, there may be short-covering rallies, but the activity of taking positions across the week is expected to be limited. Therefore, short-term trading in individual stocks less affected by external factors is likely to be predominant.

On the other hand, the Nikkei Stock Average has shown a movement incorporating political risks since peaking at 40,257.34 yen on the 15th, and was temporarily sold off to 37,712.19 yen yesterday, breaking through the 75-day and 200-day moving averages that were being watched as support lines. While there are concerns about post-election turmoil, there is a possibility that sellers may show buying back movements for the time being, making it easy to be conscious of the firmness of the downside.

Regarding earnings, pluszero 5132, DMs 9782, Seven Works 7896, Kitokuzan Koryo 2700, and Nomi Bosai 6744 are among the focused companies.

Canon reports a 14.4% increase in operating profit in the third quarter to 296.6 billion yen.

Canon Inc.-spons ADR <7751> announced that its operating profit for the third quarter of the fiscal year ending December 2024 increased by 7.3% year-on-year to 3 trillion 236.1 billion 11 million yen, while operating profit rose by 14.4% to 296.6 billion 38 million yen. Although some regions in the related markets were affected by economic downturn, overall it showed steady performance. For the full year, due to a revision of the exchange rate assumption, the net profit has been downwardly revised from 335 billion yen to 325 billion yen. Regarding semiconductor exposure equipment, "In terms of applications, there has been an increase in orders for devices for power semiconductors and the post-process of artificial intelligence (AI) production."

Materials of concern in the morning session

- The Nikkei Average is up (38,143.29, +38.43)

- The Nasdaq Composite Index is up (18,415.49, +138.83)

- The SOX index is up (5,157.61, +26.25)

The VIX index decreased (19.08, -0.16).

Long-term US interest rates fell.

USAInflationExpecting a calming period.

Active share buybacks

Request for improvement in corporate value by the Tokyo Stock Exchange.

Toyokawa Industry <6203> quadruples firearm production in the fiscal year 25, contributing to defense capability enhancement.

Nidec <6594> reorganizes its automotive business to maximize group synergy.

Yamaha Motor <7272> achieves profitability in its printing lease business, marking the first annual achievement.

Osaka Gas <9532> starts demonstration of estimating material moisture content using AI.

Kubota <6326> sells its Indian railroad components business to focus on agricultural and construction machinery.

Iwatani Corporation <8088> completes a hydrogen fuel cell ship, scheduled to operate from April next year.

Seven & i Holdings <3382> targets convenience store revenue to exceed 30 trillion yen for fiscal year 2030, expanding overseas stores.

Bridgestone <5108> proposes airless tires to local governments.

Toyota Motor <7203> advances in methane synthesis study to maintain manufacturing competitiveness.

Toyota Motor and Iwatani Corporation<8088> demonstrate hydrogen refueling for both gas and liquid.

Hitachi Construction Machinery<6305> accelerates electrification of small and medium-sized equipment, upgrading specialized development organization.

NTT<9432> to review NTT Law, draft report includes utilizing mobile networks for fixed-line telephones.

Mitsubishi Electric Corporation<6503> doubles the detection area for infrared sensors, adopts new design lenses.

NTT Data G<9613> collaborates with US-based Oracle in cloud business to enhance data sovereignty capabilities.

KDDI<9433> demonstrates direct communication between smartphones and satellites with SpaceX.

Renesas<6723> collaborates with Intel in joint development of ICs for AI computers.

Daiichi <4461> doubles production of UV-curable resins, serving the demand for server board materials.

Gunze Corporation <3002> develops heat-resistant release film for semiconductor manufacturing process using general purpose resin.

Mitsubishi Gas Chemical Corporation <4182> cooperates with Idemitsu Kosan to expand environmentally friendly methanol, establishing a supply system.

Mitsui Chemicals Co., Ltd. <4183> to increase MDI production capacity in South Korea by 50%.

☆ Schedule of events in the morning session

08:30 Tokyo metropolitan area consumer price core index for October (YoY forecast: +1.7%, September: +2.0%)

Not applicable.