[Weekly Outlook for Japanese Stocks]Rebound, relieved by passage of Japan-U.S. central bank meeting – Bank of Japan decision to revise? – Bloomberg

2024-03-15 06:24:22

Japanese stocks are expected to rebound in the third week of March (18th-22nd). In addition to the Bank of Japan’s monetary policy meeting, where there is increasing speculation that the negative interest rate policy will be lifted, the Federal Open Market Committee (FOMC) will also be held in the United States. If the central bank events in Japan and the US pass as predicted, there will likely be a sense of security in buying.

The Bank of Japan will hold a monetary policy meeting on the 18th and 19th, following which Governor Kazuo Ueda will hold a press conference. This year’s spring labor negotiations (spring labor negotiations) have shown the possibility of a significant increase in wages, and there is a growing expectation in the market that the first interest rate hike in 17 years will be decided this time. According to a Bloomberg survey of economists, support for canceling the policy in March has increased sharply since January, and the Overnight Index Swap (OIS), which reflects the market’s outlook on monetary policy, has a 60% probability of implementation in March. .

On the other hand, Governor Ueda stated in a parliamentary statement in February that even following the negative interest rate is lifted, “the accommodative financial environment is likely to continue for some time.” Unless there is a clear mention of the possibility of further interest rate hikes at the press conference or a sharp appreciation of the yen, there will be no surprises for the stock market, and there is a high possibility that the stock market will appreciate the reduction in policy uncertainty for the time being. .

The FOMC will release its statement and economic forecast on the 20th, one day late for the Bank of Japan meeting. The Bank has kept the policy rate unchanged for four consecutive meetings up until the last session, and many in the market believe that it will remain unchanged this time as well, and that interest rates will begin to be lowered from June onwards. Concerns regarding inflation remain deep-rooted, with the February Producer Price Index (PPI) announced on the 14th showing growth that was faster than market expectations.

Other factors likely to have an impact on Japanese stocks include the domestic Consumer Price Index (CPI) for February on the 22nd, and the overseas retail sales and industrial production in China on the 18th. In the second week, the Tokyo Stock Exchange Stock Price Index (TOPIX) fell 2.1% for the week, the first decline in seven weeks. Oil and non-ferrous metal stocks rose noticeably due to rising international commodity prices such as crude oil and copper, while banks and insurance stocks, which had risen significantly since the start of the year, were sold off due to expectations for policy revisions by the Bank of Japan.

《Perspectives of market participants》

Hiroshi Matsumoto Senior Fellow, Pictet Japan

There are many important events, and even if negative interest rates are lifted at the Bank of Japan meeting, they will not go any further, and the FOMC will cut interest rates following June, if the main scenario of tapering quantitative tightening (QT) is followed. , the market is likely to remain firm through the second half of the week. I would like to expect the Nikkei Stock Average to be in the 40,000 yen range. If the divergence in the direction of interest rates deepens depending on the results of the two meetings, the correlation between the Japanese and US stock markets will likely weaken.

Yugo Tsuboi Senior Strategist at Daiwa Securities

We expect Japanese stocks to pass the central bank event safely and rise. Although reports continue to carefully factor in the price, the market price has not moved significantly. The market seems to be expecting two or three interest rate hikes, and if the Bank of Japan meeting passes, stock prices are likely to rise due to the sense of security. FOMC Chairman Powell has just testified in Congress, so it will be difficult to make any major changes. Unless the US Federal Reserve (Fed) changes its direction of lowering interest rates, the impact on the market will not be large.

Related article

1710496128
#Weekly #Outlook #Japanese #StocksRebound #relieved #passage #JapanU.S #central #bank #meeting #Bank #Japan #decision #revise #Bloomberg