Japanese stocks are expected to fall for the first time in three weeks in the third week of November (13th-17th). There is a risk that interest rates will rise in the US as a result of price indicators, which will put downward pressure on Japanese stocks. The smoldering fear that China’s economy will stagnate could also weigh on the market.
In the second week of November, the Tokyo Stock Price Index (TOPIX) rose 0.6% for the week. High interest rates in the U.S. dampened investor sentiment in the stock market, resulting in sluggish growth. On the 9th, Federal Reserve Chairman Jerome Powell said that he would not hesitate to further tighten the economy, and long-term interest rates rose again.
The October Consumer Price Index (CPI), which will be released by the US Department of Labor on the 14th, will be an opportunity to confirm the effects of monetary tightening. It is necessary to be careful because last September, the rate of increase did not slow down, and the selling caused by concerns that the policy interest rate would remain high after the announcement spread to Japanese stocks. In October, the market forecast for core CPI, which excludes food and energy, which are highly volatile, rose 0.3% from the previous month, leaving the growth rate flat. Many believe that there are few signs that inflation will subside.
China’s retail sales figures for October, which will be announced on the 15th, are expected to increase by 7% compared to the same month last year, which is a high level, so there is a risk of a downturn. This is a rebound from the drop in the same month last year due to the spread of the new coronavirus infection. Although the September announcement exceeded market expectations and supported Japanese stocks, this time there is uncertainty about the future of the Chinese economy and a sense of caution continues to smolder.
Domestically, it is necessary to confirm economic trends in the preliminary gross domestic product (GDP) figures for the July-September period, which will be released by the Cabinet Office on the 15th. The market forecast for the real growth rate is an annualized decline of 0.4% from the previous quarter. It is expected to be negative for the first time in four quarters.
《Perspectives of market participants》
Jun Ishigane Chief Fund Manager of Mitsubishi UFJ Asset Management
The speed of recovery in the stock market since the beginning of November has been rapid, and adjustments in supply and demand are likely to occur. Japanese stocks are likely to experience a temporary decline. If China’s retail sales fall below market expectations, faint hopes for economic recovery will disappear, weighing on related stocks. Chinese real estate companies and other companies continue to experience sluggish business performance, so even if retail sales exceed market expectations, the tailwind will not last long. On the other hand, if the U.S. CPI falls below market expectations, Japanese stocks are likely to become more resilient as interest rates fall.
Naoki Fujiwara, Investment Manager of Shinkin Asset Management Investment Trust
I think the US CPI will stabilize to some extent and we will gradually move towards stopping interest rate hikes. Surprises in Japanese companies’ earnings results were limited and did not push up stock indexes, but if nominal GDP remains strong, this will increase confidence in this fiscal year’s performance and support Japanese stocks. Since China is expected to experience some degree of economic slowdown, the market’s focus has shifted to recovery. China’s statistics won’t come as much of a shock.
2023-11-10 06:23:15
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