[Weekly Outlook for Japanese Stocks]Heavy top prices, concerns about US inflation – Domestic earnings announcements are in full swing – Bloomberg

Japanese stocks are expected to have a heavy top in the first and second weeks of May (April 30th – May 10th). In the US, major economic indicators are leading to a decline in expectations for interest rate cuts, which is likely to dampen investors’ buying appetite. Expectations for domestic companies’ performance are also lacking in excitement.

The US Federal Reserve (FRB) will hold a two-day Federal Open Market Committee (FOMC) meeting starting April 30th.In response to economic indicators showing the strength of the economy, the US interest rate market has decided not to cut interest rates until the end of the year. It’s starting to factor in. Fed Chairman Jerome Powell is scheduled to hold a press conference on May 1st after the release of the statement.

If U.S. economic indicators turn out to be better than market expectations, there will be a growing expectation that interest rate cuts will be delayed due to concerns about inflation, which could weigh on stock prices. Market participants are turning their attention to April’s employment statistics, which will be released on May 3rd. In March, the number of non-agricultural sector employees increased for the first time in about a year. This growth showed the strength of the labor market.

In the fourth week of April, the Tokyo Stock Price Index (TOPIX) rebounded by 2.3% for the week, boosted by the rise in US tech stocks. The Bank of Japan’s announcement that it would continue to maintain accommodative financial conditions for the time being also supported the market, but the rise was small compared to the previous week’s 4.8% drop. Domestic corporate performance is a mix of strong and weak results, and stock market expectations are not high.

Many companies whose fiscal year ends in March present their performance forecasts for the new fiscal year. Toyota Motor Corporation will announce its financial results on May 8th, and while it is difficult to expect the weaker yen to further boost performance, all eyes will be on what level Japan’s largest exporter will set its expected exchange rate going forward.trading companies on the 1st Mitsui & Co. announced on the 2nd. Mitsubishi Corporation on the 8th ITOCHU Corporation plans to disclose the information.

《Perspectives of market participants》

Yasuhiko Hirakawa, General Manager of Rakuten Asset Management Investment Management Department 2

Although there will likely be many cautious forecasts for corporate financial results, it will not significantly change the direction of the market, and the Nikkei Stock Average is likely to fluctuate above and below 38,000 yen. Pay close attention to US inflation trends. If U.S. economic indicators such as employment are stronger than market expectations and interest rates need to be raised, Japanese stocks are likely to be affected by the decline in U.S. stocks as stock valuations adjust due to the rise in interest rates.

Tetsuo Seshita, Director of Multi-Manager Operations, Saison Investment Trust

The market may change completely after the holidays, so we need to be careful. Especially at times when there are few Japanese market participants, the exchange rate tends to fluctuate significantly, so be careful about currency movements. Up until now, a weak yen was expected to lead to positive buying in Japanese stocks, but that momentum is waning. From the perspective of overseas investors, the trend has begun to shift, with Japanese stocks becoming cheaper due to the weaker yen, and Japanese stocks being bought, and corporate profits having a positive effect. Volatile fluctuations in exchange rates will also weigh on the stock market.