Japanese stocks are expected to continue rising in the third week of December (18th-22nd). No policy changes are expected at the Bank of Japan’s monetary policy meeting on the 18th and 19th, and it is expected that global risk appetite, which has strengthened in the wake of expectations for an early interest rate cut in the United States, will continue.
The Bank of Japan will announce the results of the meeting on the 19th, and Governor Kazuo Ueda will hold a press conference in the afternoon. In a Bloomberg survey of 52 economists, nearly all predicted that monetary policy would remain unchanged.
Governor Ueda said in a Diet session on the 7th that “the situation will become even more challenging from the end of the year to next year,” and expectations for an early return to normalcy intensified in the market. The press conference is likely to be an opportunity to confirm the true meaning of these statements. If it does not significantly change the market’s current policy outlook, it is likely to support Japanese stocks.
Meanwhile, in the United States, the Federal Open Market Committee (FOMC) has predicted multiple interest rate cuts next year, and some believe that the Bank of Japan will move to end negative interest rates before that happens. If the Japan-U.S. interest rate differential narrows as a result of measures being taken to revise policy in preparation for the January meeting next year, there will be pressure on the dollar to weaken and the yen to appreciate, which could weigh on Japanese stocks, especially export-related stocks such as automobiles. .
Japanese stocks rebounded in the second week, with the Tokyo Stock Price Index (TOPIX) rising 0.3% for the week. Expectations for a soft landing in the U.S. economy led to buying in Japan as well, including in economy-sensitive stocks. Semiconductor stocks also rose due to the sudden drop in interest rates after the FOMC.
In addition to the Bank of Japan meeting, the third week will see the announcement of the number of foreign tourists visiting Japan for November on the 20th, and the November National Consumer Price Index (CPI) on the 22nd.
In China, the People’s Bank of China (central bank) is scheduled to announce the Loan Prime Rate (LPR), which is the benchmark for lending interest rates, on the 20th. In the United States, the number of housing starts and existing home sales for November will be announced on the 19th and 20th, and the personal consumption expenditure (PCE) price index for November will be announced on the 22nd.
《Perspectives of market participants》
Kiyohide Nagata Chief Strategist, Tokai Tokyo Research Center
The pace of increase from November will slow down, but the market will continue to be difficult to fall. With the dollar/yen market calming, if people who don’t want to miss out on the global risk-on trend after the FOMC move in, it could lead to a year-end rally. Since the upward pressure on prices due to the weak yen has eased and there is no longer a need for foreign exchange intervention, there will be limited statements that would cause market concerns at the Bank of Japan meeting. The true meaning of Governor Ueda’s “challenging remarks” is a matter of concern.
Hiroshi Matsumoto, Senior Fellow, Investment and Product Division, Pictet Japan
If the message from the Bank of Japan is within the range the market is prepared for, Japanese stocks will likely follow the rise in overseas stocks in the second half of the week. If the Bank of Japan does not act before the US interest rate cuts begin, it will be too late, so now is the time to engage in dialogue with the market, including by revising its forward guidance. If the yen continues to appreciate in response to the Bank of Japan’s message, it will be perceived as a stronger message than the market can digest, weighing on Japanese stocks.
2023-12-15 06:26:45
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