The Nikkei average fell for the third consecutive day. It finished the morning session at 37,944.68 yen (volume approx. 0.65 billion shares), down 419.59 yen (-1.09%) from the previous trading day.
The U.S. stock market made a significant rebound on the 23rd. The Dow average closed at 41,175.08, up 462.30 points (+1.14%). The Nasdaq rose by 258.44 points (+1.47%) to 17,877.79, and the S&P 500 increased by 63.97 points (+1.15%) to 5,634.61. This was driven by buying expectations following comments by Federal Reserve Chairman Powell at the Jackson Hole symposium, revealing a swift interest rate cut, which boosted buying sentiment and led to a steady rise throughout the day, expanding in the final stages.
Despite the significant rebound in the U.S. stocks, the Tokyo market began with a preference for selling as the exchange rate moved towards a strong yen and weak dollar, leading to a decline in export-related stocks such as Toyota Corp. and Honda. The Nikkei average fell below 38,000 yen, but the market avoided an overall downturn, as Nitori Holdings and other yen-benefiting stocks were bought.
In the Nikkei average adopted stock, Toyota Motor, Honda, as well as Nissan Motor <7201>, Mazda <7261>, Suzuki <7269>, Subaru <7270> and other automobile-related stocks fell overall. In addition, Mitsukoshi Isetan <3099>, Furukawa Electric <5801>, Yamaha Motor <7272>, SUMCO <3436>, TDK <6762> became more sell-oriented.
On the other hand, Nitto HD, ANA Holdings <9202>, Nichirei <2871>, Nippon Ham <2282>, Japan Airlines <9201> among others were bought as part of the yen's strength benefits. Real estate stocks such as Mitsui Fudosan <8801>, Mitsubishi Estate <8802> were also firm. In addition, TOTO <5332>, Line Yahoo <4689>, M3 <2413> were bought.
By industry, transportation equipment, pharmaceuticals, banking, rubber products, insurance etc. declined, while pulp and paper, air transportation, fisheries and forestry, real estate, land transportation etc. rose.
At the Jackson Hole meeting, Fed Chairman Powell did not specify the rate cut amount for the September meeting, but stated that he would do whatever it takes to support a strong labor market. In response to this statement, if the employment-related economic indicators to be announced in early September significantly fall below market expectations, the market perceives that a 0.50% rate cut at the September meeting is very possible due to the speculation of narrowing the interest rate difference between Japan and the United States, which could lead to a stronger yen and weaker dollar trend. The market has already factored in three rate cuts (0.75%) by the end of the year, but if a rate cut of 0.50% is implemented at once, similar to early August, there is a possibility that the market will strongly consider the onset of a recession.
Assuming that the dollar-yen trend continues due to the Dollar Index updating the year-to-date lows at 100.5 points, caution is required for the afternoon session of the Tokyo market, which may see a significant decline in the Nikkei average due to the accelerating trend of a stronger yen and weaker dollar.