In the afternoon trading on the 18th, we should pay attention to the following three points.

・The Nikkei average rebounds, refrains from active buying before the FOMC.

・The dollar-yen is weak, with dollar selling in anticipation of a US rate cut.

- The top contributor to price increase is Fast Retailing (9983), and the second place is Advantest (6857).

■The Nikkei average rebounds, refrains from active buying before the FOMC.

The Nikkei average rebounded. It ended the morning trading at 36,461.44 yen, up 258.22 yen (+0.71%) from the previous day, with an estimated volume of 704 million 40 million shares.

On the 17th, the U.S. market was mixed. The Dow Jones fell by 15.90 points (-0.04%) to 41,606.18, the Nasdaq rose by 35.93 points (+0.20%) to 17,628.06, and the S&P500 closed at 5,634.58, up 1.49 points (+0.03%). The Federal Open Market Committee (FOMC) meeting initially raised expectations of a rate cut, leading to an increase. However, after the August retail revenue exceeded market expectations, the expectation of a significant rate cut slightly receded. There was caution ahead of the FOMC meeting and adjustments, causing the market to struggle. Profit-taking selling was observed near record highs for the Dow, leading to a downturn. The Nasdaq was supported by a positive interest rate outlook, trading firmly and closing mixed.

American stocks lacked direction with mixed highs and lows, but as the exchange rate rose to the 142 yen range, the Tokyo market started with a predominance of buying. The Nikkei average rebounded but paused its rise around the previous day's high of 36,600 yen, gradually reducing the upward momentum. There was a strong cautious mood and a wait-and-see attitude ahead of the FOMC results announced at 3 a.m. on the 19th in Japan, with active buying being restrained.

In Nikkei average constituent stocks, Sumitomo Metal <5713>, Mitsubishi Materials <5711>, and other resource-related stocks were bought as NY gold prices hit a 3-day high, while Mazda <7261>, Toyota Motor <7203>, Hino Motors <7205>, Honda <7267>, Suzuki <7269>, and other automobile-related stocks rose on the back of a pause in the yen's appreciation. In addition, parts of the financial stocks sold yesterday, such as Credit Saison <8253>, T&D Holdings <8795>, and Resona Holdings <8308>, rebounded.

On the other hand, IHI <7013>, which hit a year-to-date high in the morning, continued to decline, alongside Mitsubishi Heavy Industries <7011>, another defense-related stock. Furthermore, railway stocks such as Keio Corporation <9008>, Odakyu Electric Railway <9007>, Tobu Railway <9001>, Keisei Electric Railway <9009>, and JR West Japan <9021> fell overall. Additionally, such as Mitsukoshi Isetan <3099>, Chugai Pharmaceutical <4519>, and Kao <4452> were sold.

In terms of global sectors, transportation equipment, petroleum and coal products, warehouse and transportation-related industries, rubber products, iron & steel, among others, rose, while land transportation, air transportation, pharmaceuticals, food products, fisheries and agriculture, among others, declined.

With the exchange rate fluctuating to around 141.40 yen per dollar compared to the morning, showing a strengthening yen and weakening dollar, the recovery of Japanese stocks has slowed. As the afternoon session of the Tokyo market continues to be dependent on the exchange rate, it's important to be aware of the potential for narrowing gains. The Prime Market trading volume in the morning session remained at 1.6 trillion yen, with a strong wait-and-see mood ahead of the FOMC announcement. The afternoon is expected to continue with quiet market activity.

The USD/JPY is weak, with focus on the US interest rate cut, resulting in USD selling.

In the morning session of the Tokyo market on the 18th, the USD/JPY was weak and dropped from 142.39 yen to 141.38 yen. Due to expectations of a significant interest rate cut at the Federal Open Market Committee (FOMC), the USD has been selling off since early morning. While the Nikkei average stock price has rebounded, the upward momentum has been limited, curbing yen selling.

The trading range so far is as follows: USD/JPY is from 141.38 yen to 142.39 yen, EUR/JPY is from 157.32 yen to 158.23 yen, and EUR/USD is from 1.1113 dollars to 1.1130 dollars.

Check stocks for the afternoon session

- The top five stocks that hit the daily limit are the Immunobiology Research Institute <4570> and Noileimmune Biotech <4893>.

*Includes temporary stopper (indicated price)

- The top contributor to the price increase is First Retail <9983>, with Advantest <6857> in second place.

Economic indicators and remarks by important people

[Economic indicators]

- NZ's ordinary balance of payments for the 4th to 6th quarter: -4.826 billion NZ dollars (estimate: -3.943 billion NZ dollars, 1st to 3rd quarter: -3.825 billion NZ dollars ← -4.359 billion NZ dollars)

- Japan's trade balance in August: -695.3 billion yen (estimated: -1.4324 trillion yen, July: -628.7 billion yen)

- Japan's machinery orders in July (excluding ships and electrical power) : -0.1% month-on-month (estimated: +0.5%, June: +2.1%)

[Important Person's Remarks]

-Related sources.

Some of the countries providing support to Ukraine are considering the possibility of ending the war through negotiations.

September government monthly economic report

- 15:00 UK - August Consumer Price Index (YoY forecast: +2.2%, July: +2.2%)

- 15:00 UK - August Producer Price Index Output (YoY forecast: +0.5%, July: +0.8%)