In the morning trading on the 12th, the following 3 points should be noted.

■ High-tech driven development with the NVIDIA effect.

Kobe Steel, 3Q operating profit increased by 14.4% to 26.6 billion yen.

■ Morning focus on Sodick, various machinery companies, India offensive, and accelerated localization of manufacturing, sales, and services.

■ High-tech driven development with the NVIDIA effect.

On the 12th, the Japanese stock market is likely to determine the firmness after a round of buying. In August, the US Consumer Price Index (CPI) accelerated unexpectedly, causing the observation of a substantial interest rate cut to recede and the NY Dow to be sold off significantly. However, after a round of selling, there was a strengthening movement of buybacks led by the high-tech stocks. In addition, Goldman Sachs' CEO Solomon, at the company's event, expressed an optimistic view by predicting a soft landing, which was considered significant news. The settlement value of the Chicago Nikkei 225 futures was 36,595 yen, up 825 yen from Osaka. The yen exchange rate is around 142.30 yen per dollar.

The Nikkei 225 stock average is expected to start with a buying lead due to the rise in US stocks. The Nikkei 225 futures temporarily fell to 35,410 yen in the night session, but there was a recovery towards the end, and they were temporarily bought up to 36,630 yen. Although it is within the recent range of consolidation around 36,000 yen, it is likely to see an increased momentum for a rebound as it has exceeded the -1σ of the Bollinger Band. In the US, as Nvidia surged more than 8%, buying spread to other semiconductor stocks. This is highly likely to have a ripple effect on the Tokyo market, especially towards companies like Toshiba Electronic＜8035＞, and is expected to lead the Nikkei 225 stock average.

The Nikkei 225 stock average is moving around 37,185 yen for the 25-day moving average and 37,520 yen for the 200-day moving average, so it is likely to first focus on the 25-day moving average. With the upcoming special clearing index calculation for the September futures options (major SQ), the futures market will mainly focus on the rollover due to the change in contract month. Therefore, there is limited movement expected in taking aggressive positions, but it is likely that the bears will strengthen their buybacks after the CPI passage. Although there is a potential for a stronger standoff after a round of buying, there will be a consciousness towards buying hedge positions in the face of strengthened buyback movements.

The flow of investment is likely to be led by high-tech stocks, and if there is a growing concern about the sluggishness of rebounds, there is also the potential for short-term selling, so caution is necessary. However, it may be difficult to initiate selling due to the Nvidia effect, and the basic stance is likely to be aiming for buying on the dips. In addition, there is a possibility of increased movements of individual investors aiming for narrow range trading in small to mid-cap stocks.

Kobe Steel, 3Q operating profit increased by 14.4% to 26.6 billion yen.

Kobe Bussan <3038> announced its financial results for the third quarter of the fiscal year ending in October 2024, with revenue of 377.2 billion 83 million yen, an increase of 11.4% compared to the same period last year, and operating profit of 26.6 billion 40 million yen, an increase of 14.4%. The number of "Gyomu Super" stores increased by 23 stores, with 41 store openings and 18 store closures, resulting in a total of 1071 stores. The revenue from the Gyomu Super business was 363.7 billion 23 million yen, an increase of 10.9%.

Materials of concern in the morning session

・The NY Dow is up (40,861.71, +124.75)

- The Nasdaq Composite Index rose (17,395.53, +369.65)

1 dollar = 142.30-40 yen.

- Chicago Nikkei futures rose (36,595, +825 compared to Osaka)

- SOX index rose (4,910.17, +229.50)

- VIX index decreased (17.69, -1.39)

- U.S. crude oil futures rose (67.31, +1.56)

Expectations for inflation to ease in the US.

Active share buybacks

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

Sodick <6143> and other machinery companies are accelerating their local production and sales and service in India.

Mitsubishi HC Capital <8593> Lex Plus raised 0.64 billion yen, conveyor robot subscripts

- Sumitomo Chemical <4005> to reduce acrylic resin production in Singapore, with plans to stop facilities at the end of the month.

- Mercari <4385> and Panasonic-Mitsubishi Corporation to expand nationwide shipping of Mercari products from home delivery boxes.

- Sysmex <6869>'s subsidiary Riken Genesis to enhance quantitative analysis of proteins using AI with Hitachi.

- Kubota <6326> acquires US startup to support the use of AI for fruit cultivation.

- Mazda <7261> plans to strengthen hybrid vehicles, utilizing existing units.

- Nippon Escon <8892> acquires the former Denso Ikeda factory.

- Hitachi Construction Machinery <6305> opens a component warehouse in the United States to enhance competitive capabilities through prompt supply.

- ACSL <6232> introduces drone cameras in the United States to comply with the NDAA.

- SoftBank <9434> signs memorandum of understanding with Nokia for joint verification in AI fusion communication network and 6G research.

- Nisshinbo HD <3105> Nisshinbo Micro develops a system to predict equipment failures early.

- Canon <7751> Executive Managing Officer, Mr. Hiroyuki Mueno, states that the semiconductor lithography equipment is performing well.

- NEC <6701> achieves stable operation of AGV for warehouses and factories, suppressing wireless delay.

- Microwavable Chemistry <9227> forms a partnership with Chugai Roko Kogyo for the development of rotary hearth furnaces to meet the increasing demand for refining.

- Unitika <3103> develops a technology for synthesizing biodegradable polyester resins.

- Mitsubishi Chemical <4188> obtains international sustainability carbon certification for methacrylic resins and others.

- Nippon Shokubai <4114> opens a new factory in Fukuoka to manufacture electrolytes for automotive batteries, operations to begin in 2028.

- Amita HD <2195> collaborates with a Malaysian company to produce biofuels.

- Sumitomo Electric Industries <5802> sees rapid growth in demand for unique hollow fiber membranes in China.

- Shimizu Construction <1803> develops urban construction elevators with the highest vertical transport capacity in Japan.

- Okinawa Electric Power <9511> promotes renewable energy in Palau through facility introduction with Tokyu Fudosan.

- KH Neochem <4189> raises prices of chemicals such as aldehydes.

- Asahi Kasei <3407> raises prices of aluminum paste.

☆ Schedule of events in the morning session

8:50 - Survey of Corporate Economic Outlook for July-September period - Major enterprises overall business sentiment index (April-June period: +0.4 compared to the previous period)

8:50 - August Domestic Corporate Price Index (Year-on-year forecast: +2.8%, July: +3.0%)

10:00 - Address by Bank of Japan Policy Board Member Tamura (Okayama, scheduled for afternoon press conference)

Not applicable.