[Tokyo 14th Archyde.com]-
With the U.S. Consumer Price Index (CPI) outperforming market expectations and the core index continuing to rise, it’s hard to be bullish on stocks near-term. On the domestic demand side, rising wages and imputed rents are persistent, and the pace of slowing inflation is likely to be slower than initially expected by the market.
However, there is no need to be overly pessimistic. Naturally, there are some upsides and downsides to market expectations. The underlying trend is not unnatural, and the rate of increase on a year-on-year basis was lower than the previous month.
US stocks may have overreacted slightly ahead of the US SQ (Special Liquidation Index) calculation this week. When the CPI was used as an excuse to sell the stocks, it seems that a temporary collapse in supply and demand, such as the throwing of options, led to the sharp decline.
On the other hand, the dollar is strong against the yen. If the dollar/yen exchange rate stabilizes at the 140 yen level, it will be a significant factor in boosting profits for domestic export companies. The government is trying to hasten the full-fledged resumption of inbound tourism, which will also benefit from the yen’s depreciation. The Nikkei Stock Average is also in a good shape with the 75-day line exceeding the 200-day moving average line. In the immediate future, the 200-day line passing through the 27,400 yen level is likely to be the bottom.
At the September US Federal Open Market Committee (FOMC) meeting, if the members’ policy interest rate forecasts shown this time shift upwards, stock prices will be negative, so caution is required. However, it is difficult to assume that the pace of interest rate hikes will accelerate even further, given that there is no major change in the underlying trend. Once the event is passed, the market will drop out and the stock price may rise.