Last week’s Nikkei stock average fell 288 yen from the previous week due to concerns about a significant rate hike in the United States. On the night of August 26 (Friday), US stocks plummeted due to remarks by Jerome Powell, chairman of the central bank Fed (Federal Reserve Board). From August 29th (Monday) to September 2nd (Friday), Japanese stocks are likely to plunge even further.
Last Week: Jackson Hole Shock! U.S. stocks plummet due to concerns over continued rate hikes!
On the night of the 26th (Friday), US stocks were hit by a strong decline that could be called the “Jackson Hole Shock.” The New York Dow Jones Industrial Average fell $1,008. The S&P 500 index, which institutional investors use as a management guideline, plummeted to 4% lower than the previous week.
The trigger was an economic symposium held in Jackson Hole, Wyoming, USA.
Fed chairman Powell’s hawkish talk about tightening monetary policy sent chills on stock prices.
Fed Chair Powell said monetary tightening “must continue until we get it done” to keep prices down for the first time in 40 years.
The Fed said it would continue to raise interest rates significantly in the fall.
He also said, “History strongly warns against premature monetary easing,” warning the stock market, which is optimistic that interest rate hikes will be restrained from autumn onwards.
Also on Friday, July 26th, the US Personal Consumption Expenditure Price Index (PCE Deflator) was released.
*For more information on the PCE deflator, click here:Find out in 1 minute!Relationship between inflation and stock prices
The PCE deflator increased by 6.3% year-on-year, slowing its growth rate. The month-on-month decline was 0.1%, indicating a slowdown in inflation.
In response to this indicator, US stocks were initially rising on Friday, 26th. turned into a decline.
On the other hand, last week’s Japanese stocks, which had risen sharply until the week before last, fell back.
On the 22nd (Monday), it was announced that engine fraud problems such as fuel economy and exhaust gas tests would further expand.Hino Motors (7205)The main automobile sector fell, such as the
The Tokyo Stock Exchange Mothers Index, which had continued to rise since late June, also dropped, and the service and retail sectors, which have many emerging growth companies, also sold off.
This Week: Early Week Stock Drop Is Inevitable! ? Attention to US economic indicators such as employment statistics!
Japanese stocks are likely to fall sharply this week following the plunge in US stocks on Friday night.
The focus is how long it will take for the stock market to absorb Chairman Powell’s aggressive remarks about raising interest rates.
Despite the fact that the Fed will continue to raise interest rates significantly, Chairman Powell said that he would make a comprehensive judgment on future data at the FOMC (Federal Open Market Committee) meeting on September 20-21. only. The 0.75% rate hike was not specified.
It remains to be seen if the current plunge in stocks will be a market overreaction, or more simply a profit-taking after the reversal in July/August, or a resumption of a significant downtrend.
We can’t say there is no possibility of an early rebound rise in the second half of the week.
In this week’s economic indicators, Germany’s August CPI (consumer price index) will be announced on Tuesday, 30th, and the August CPI of France and the euro on Wednesday, 31st.
*Click here for more information on CPI:Find out in 1 minute!Relationship between inflation and stock prices
In the European bloc, which relies on Russian natural gas, signs of a slowdown in inflation, as in the United States, could ease the market a bit.
In the United States, the August Consumer Confidence Index will be released on Tuesday, September 30th, the ISM (Institute for Supply Management) Manufacturing Business Index for August will be released on Thursday, September 1st, and Friday, September 2nd. will release the employment statistics for August.
*For more information on US employment statistics, click here:Find out in 1 minute!Relationship between employment statistics and stock prices
Since the continuation of significant interest rate hikes from autumn onwards is the main concern, if these US economic indicators are too good, there is a risk that stock prices will fall even faster.
In the previous July employment report, the number of non-farm payrolls increased by 528,000 from the previous month, significantly exceeding expectations, and US stocks turned downward.
Again, all eyes will be on how the stock market reacts when the jobs report gets too strong.
Do you take a positive view that the US economy is strong enough to withstand a large interest rate hike?
Will strong employment be viewed negatively as an excuse for the Fed to continue to raise rates sharply?
Conversely, the same is true if US economic indicators deteriorate.
Will the Fed be positively judged that the hard-line interest rate hikes that Chairman Powell has called for cannot continue in the recession?
Is it a pessimistic view that the US economy will finally enter a recession due to a series of large interest rate hikes?
In times of uncertainty, it is important to calmly ascertain the reaction of stock prices to economic indicators without looking ahead.
The September market starts this week.
Unlike July and August, which continued to rise steadily, September is likely to see sharp price movements, including a sharp decline and a sharp rebound after that.
That trend could continue until the release of the US August CPI on Tuesday, September 13th.
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