In the morning of August 2nd trading, we want to focus on the following three points.

Identify the situation where the bottoming out feeling is becoming more clear.

Japan Steel raises guidance for fiscal 2018/3, net profit expected to be 340 billion yen compared to previous estimate of 300 billion yen.

Focus of the morning session: Mitsubishi Motors partners with Honda and Nissan, cooperates in EV components and software.

Identify the situation where the bottoming out feeling is becoming more clear.

On the 2nd, the Japanese stock market may search for a short-term bottom amidst the continuous large decline. On the 1st, the US market saw the NY Dow drop by 494 points and the Nasdaq by 405 points. Concerned about the economic downturn, sell-offs increased as new unemployment insurance claims reached a one-year high and the ISM manufacturing business conditions index unexpectedly declined. The Chicago Nikkei 225 futures settlement price was 36,845 yen, an Osaka-based decrease of 1105 yen. The yen exchange rate is hovering around 149.30 yen per dollar.

Starting with a sell-off, due to a hedge with Chicago futures. Yesterday's Nikkei average stock price dropped by 975 yen, wiping out the rebound from the previous day. The Nikkei 225 futures closed at 36,710 yen, a decrease of 1240 yen during the night session, and there were scenes where it was sold down to 36,420 yen at one point. With a sudden decline to the 200-day moving average, it is likely that selling will take precedence in a wide range of stocks in the form of a hedge with futures.

Excessive sell-offs are easily noticed to counter against rapid declines, and given the fact that they have fallen to the 200-day moving average level, it seems that there will be a conscious movement to aim for a dip. However, in the United States, there is a view that the Federal Reserve Board (FRB) will make three interest rate cuts this year based on economic indicators such as ISM manufacturing, causing US long-term interest rates to fall below 4% for the first time in about six months. In the foreign exchange market, the trend of appreciation of the yen is strengthening due to the reduction of the interest rate difference between Japan and the United States, and there is a possibility that the futures market will be wary of the advancement of selling movements a result of accelerated closing of positions aimed at the interest rate spread between Japan and the US.

Also, as positive trading is often restrained when earnings announcements become more active, even in phases where the sense of selling domination is considered, it is likely to be limited to short-term profit taking. First of all, we want to identify the situation where a clear bottoming out feeling is becoming stronger. Trading is easy to navigate individual responses based on earnings, and Astromax <7162>, King Jim <7962>, Shinmeiwa Industry <7224>, Zeria Knew <4559>, Hirose Electric <6806>, Nippon Ham <2282>, Konami G <9766>, Nitto Boseki <3110>, Kotobuki Spirits <2222>, Sumitomo Electric Industries <5802>, and others have been attracting attention in those announced last night.

Japan Steel raises guidance for fiscal 2018/3, net profit expected to be 340 billion yen compared to previous estimate of 300 billion yen.

Nippon Steel Corp. <5401> announced a revision to its earnings forecast for the fiscal year ending March 2025. The net profit was upwardly revised from 300 billion yen to 3,400 billion yen despite the continuing slump in steel demand. This is due to the improvement in the margin (spread) between the cost of raw materials and the selling price of steel products. Sales revenue for the first quarter of the fiscal year ended March 2025 was 2 trillion 191.509 billion yen, down 0.4% from the same period last year, while operating profit was down 4.7% to 236.977 billion yen. This exceeded the consensus (about 175 billion yen).

Materials of concern in the morning session

Long-term US interest rates fell.

Expectations for inflation to ease in the US.

Active share buybacks

Request for improvement in corporate value by the Tokyo Stock Exchange.

Mitsubishi Motors partners with Honda and Nissan, cooperates in EV components and software.

GS Yuasa establishes new EV battery factory in Moriyama, Shiga, 2nd location, 35 year operation.

ASICS utilizes foreign personnel at its headquarters, next year database operation.

Japan Steel to reorganize domestic electric resistance welded steel pipe, also reducing the number of lines.

Otsuka Holdings acquires US company for $0.8 billion to expand into self-immunity area.

Mitsubishi Chemical Group reduces coke production capacity by 40%, low sales of steel-related materials.

Rakuten to offer AI chat and document support for corporate business.

NEC receives order for communication system for Jakarta high-speed railway.

Toyota's HV demand increases 1.5 times in Apr-June, despite intensifying competition, due to strong product power.

Isuzu expands overseas with UD vehicles, large trucks, promoting complementary products.

Yamaha Motor uses electric furnace steel plates for 2-wheeled packaging frames, first domestic adoption, reducing CO2 emissions.

Mitsubishi Heavy Industries relocates its headquarters, invests 15 billion yen, consolidates office and research buildings.

Hitachi Construction Machinery cooperates with customer system to smoothly remote-control hydraulic shovels.

Kyocera Corporation <6971> expands sales of low heat expansion material "CozyrLite" for astronomical and space use.

Mercari <4385> Group's Melcoin introduces new function of automatic Bitcoin deposit via app.

Sharp <6753> expands cooperation equipment with solar power for drum-type washing machines, launching two models next month.

Hokuetsu Corporation <3865> aims to expand business by partnering with Daio Paper to provide round-trip transportation between Niigata and Chubu.

Mitsubishi Estate <8802> develops large-scale logistics facilities with a Hong Kong-based company in Australia.

Tokyu Fudosan Holdings <3289> President Hironori Nishikawa aims for new business development in Shibuya.

☆ Schedule of events in the morning session

8:50 Monetary Base in July (June: +0.6% YoY).

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