U.S. stocks surged last week as concerns regarding quantitative tightening (QT) receded. Japanese stocks were almost flat, partly due to the appreciation of the yen, which at one point reached the 132 yen level to the dollar. This week, from August 1st (Monday) to 5th (Friday), when the month changes, we are afraid of a rebound following the sharp rise, but the momentum is likely to rise further.
Last week: FOMC passage puts US stocks in super bullish mode. Worried regarding the strong yen!
Last week, the US market was enveloped in an optimistic mood that might be described as “no weather.”
The S&P 500 index, which institutional investors use as a guideline, rose 4.3% on the week. The month of July ended with the best monthly performance since 2020, up 9.1%.
What changed the pessimistic atmosphere was the FOMC (Federal Open Market Committee), which decides US monetary policy. On the 27th (Wednesday), we decided to raise the interest rate by 0.75%.
However, FRB (Federal Reserve Board) Chairman Jerome Powell mentioned that the pace of future interest rate hikes will slow down.
Triggered by this remark, the market turned from total pessimism to hyper-optimism, saying that “the high-paced rate hike is over.”
In addition, announced on the 28th (Thursday)Amazon.com (AMZN)‘s financial results for the April-June period of 2022 increased more than expected, and the stock price on the 29th (Friday) rose by more than 10%.
Boasting the world’s largest market capitalizationApple (AAPL)However, earnings were strong due to increased sales of iPhones. Shares were up 3% on Friday.
As a result, the Nasdaq Composite Index of tech stocks rose 4.7% for the week and more than 12% for the month of July.
On the 29th (Friday), the US personal consumption expenditure price index (PCE deflator) for June was announced. Prices rose by 6.8% year-on-year, accelerating the first price hike in 40 years. But it wasn’t considered bad news.
*For more information on the PCE deflator, click here:Find out in 1 minute!Relationship between inflation and stock prices
On the other hand, last week, the announcement of financial results for the April-June quarter of 2022 started in Japan.
Site management for doctors, which announced an increase in sales and a decrease in profit on the 27th (Wednesday)M3 (2413)However, it soared by 14.5% in the week as it was evaluated as “increase in revenue” rather than “decrease in profit”.
The oversold IT-related stocks are likely to continue to be repurchased in the future.
However, following the market closes on the 29th (Friday)Sony Group (6758)downgraded its final profit forecast for the fiscal year ending March 2023. Monday, August 1st is going to start cheaply.
In Japan, the “BA.5” strain of Corona, which is highly contagious, is raging, and the number of new infections has exceeded 200,000, the highest number ever.
but,ANA Holdings (9202)orH.I.S. (9603)Airline stocks and travel-related stocks have performed well, with stock prices up more than 2% from the previous week.
Since no action restrictions have been introduced, the stock price has not fallen sharply.
This Week: How Are Japanese Companies Earnings? Attention to the US business confidence index and employment statistics!
This week, the financial results for the April-June 2022 period of Japanese companies will be in full swing.
On August 2 (Tuesday), attention will be paid to the impairment loss of the Russian natural gas business “Sakhalin 2”Mitsubishi Corporation (8058)WhenMitsui & Co. (8031)。
On the 4th (Thursday), large companies that support the Japanese economyToyota Motor (7203)。
On Friday, the 5th, the stock price rose 85% year-on-year this year.Mitsubishi Heavy Industries (7011)popular stocks related to semiconductorsLasertec (6920)。
It looks like it’s going to be a development of joy and sorrow in the performance of individual stocks.
As a whole, oversold IT-related stocks and reopening stocks will continue to be re-purchased, while the rapid appreciation of the yen is likely to weigh on mainstay automobile and electronic component stocks.
In terms of US-related indicators, attention will be focused on the July manufacturing index released by the Institute for Supply Management (ISM) on the evening of Monday, July 1, and the non-manufacturing index on Wednesday, July 3.
Since the economic recession is the biggest concern for the market, if the index drops to around 50, which is the boundary between boom and bust, there is a possibility that the stock price will come back and sell.
July employment statistics will be released on Friday, May 5.
Last June, non-farm payrolls increased by 372,000 more than expected.
This year’s forecast is for an increase of 250,000. Combined with the growth in average hourly wages, which puts pressure on inflation, if the figures are too good, there is a risk that concerns regarding monetary tightening will emerge once more.
But the face of the stock market really changes.
Turning to Japanese stocks, last week we began to see the end of the rapid depreciation of the yen.
This may be good news for Bank of Japan Governor Haruhiko Kuroda, who has been treated as the culprit behind the depreciation of the yen due to the stubborn continuation of quantitative easing.
However, a sharp move like last week, where the yen appreciates by 6 yen in a week, is negative for Japanese stocks.
Since the beginning of 2022, Japanese stocks have been enveloped in a mood of “surprisingly firm compared to weak US stocks.” The depreciation of the yen was the driving force behind this trend.
Going forward, the appreciation of the yen may work like a body blow, and the mood of the market may gradually change.
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