Mr. Seiji Katsurahata[Tokyo market has returned to the risk-off market after the week of rebellion](2) | Special feature – Stock search news

2023-10-16 10:45:00

Mr. Seiji Katsurahata (Chief Economist, Dai-ichi Life Economic Research Institute)
-Uncertainty over geopolitical risks in the Middle East and trends in U.S. long-term interest rates-

On the 16th, the Tokyo stock market was heavily sold, with the Nikkei stock average falling by more than 700 yen at one point, falling well below the 32,000 yen mark. As the conflict between the Islamic organization Hamas and Israel intensifies in the Middle East, the future of the market is becoming increasingly uncertain due to geopolitical risks. Both the Japanese and US stock markets are currently experiencing unstable price movements, with trends in US long-term interest rates sideways.What is the outlook from here? We asked two veteran market participants their views on the outlook for second-half market prices starting in the second half of October.

●“Awareness of downside risk in light of the situation in the Middle East”

Mr. Seiji Katsurahata (Chief Economist, Dai-ichi Life Economic Research Institute)

The Tokyo stock market is currently looking for a downside due to geopolitical risks in the Middle East. What is of concern is the trend in the crude oil market, and one thing to watch out for in the future is that if Iran directly intervenes in the conflict between Hamas and Israel, it could lead to a spike in crude oil prices, and the stock market is also at a risk-off level. may increase.

In Japan’s case, Japan is highly dependent on crude oil produced in the Middle East, and high crude oil prices, combined with the weakening of the yen, could spur an increase in energy import costs, and Japan must be nervous about Iran’s moves. I don’t get it. Trends in the dollar-yen exchange rate also play a key role in the foreign exchange market. Even if the US Federal Reserve Board (FRB) is nearing its final stage of interest rate hikes, there is a possibility that long-term interest rates will remain high due to the policy rate being left unchanged for a prolonged period, and the yen’s weak trend will continue for a long time due to the difference in interest rates between Japan and the US. It is expected that this will change. For now, the focus is on the content of Fed Chairman Powell’s speech on the 19th. Powell is expected to once again mention the possibility that policy interest rates will remain unchanged for an extended period of time, and it will be interesting to see how this impact will be reflected in the U.S. stock market and foreign exchange market.

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The range of the Nikkei average over the next month is expected to be around 30,500 yen, which is the low level on the 4th of this month, and an upper level of 33,000 yen, but in the near term, downside risk is more important. It can be said that it is easy. However, domestically, speculation about income tax cuts, which are on the table within the Kishida administration, could serve as a source of support for the market.

As for where to look, I would like to focus on semiconductor-related stocks with an eye toward buying on the spur of the moment. The financial results of US high-tech companies are likely to show signs of improvement in the July-September period, and this may have a positive effect on the Tokyo market. Other than this, stocks related to retail and restaurants are likely to exhibit an advantage due to the high level of inbound demand from tourists visiting Japan.

(Interviewer: Junichi Nakamura)

(Katsuhara Seiji)
Chief Economist, Economic Research Department, Dai-ichi Life Economic Research Institute. Responsible for overseeing the U.S. economy, financial markets, and overseas economies. In 1992, he joined the Japan Research Institute. In 1995, he was seconded to the Japan Center for Economic Research. In 1999, he joined Marusan Securities. He is in charge of analyzing the economic and financial markets of Japan, the United States, Europe, and emerging countries. Current position since 2001. During this time, he was also in charge of European and emerging country economies.

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