In the morning session of October 1st trading, we want to focus on the following three points.

Expectations for policies towards the Ishiba administration are once again increasing.

■ Shimamura, 2Q operating profit increased by 4.1% to 31.4 billion yen

Highlights of the morning session: Citizen Watch, the group's machinery, and the renewal of the U.S.-specific automatic lathe, to be globally launched from June next year.

Expectations for policies towards the Ishiba administration are once again increasing.

In the Japanese stock market on the 1st, after a round of buying, there is a strong sense of stalemate, but the willingness to buy on dips seems strong. On September 30th, the U.S. market saw the NY Dow rise by 17 points and the Nasdaq rise by 69 points. Due to the unexpectedly improved September Chicago Purchasing Managers' Index, buying dominated, but Powell, Chairman of the Federal Reserve Board (FRB), suggested a slight pace of rate cuts in his speech, which led to a temporary significant shift to selling from disappointment. However, after the selling wave, there were buybacks towards the end, setting new record highs daily. The Chicago Nikkei 225 futures settlement price was 38,115 yen, up 185 yen from Osaka. The yen exchange rate is hovering around 143.50 yen to the dollar.

The Nikkei average stock price is expected to start with a buying lead, following the Chicago futures. In the U.S., the expectation of a significant 0.5% rate cut following Powell's FRB remarks has diminished, but it is indicated that there will be two 0.25% rate reductions by the end of the year in the Federal Open Market Committee (FOMC), with the perception that an economic downturn in the U.S. due to rate cuts can be avoided. Therefore, the strength of the buying on dips has been noted.

Yesterday's Nikkei average stock price saw a decline of over 1900 yen, but this was a rebound decline after a sharp rise incorporating the stance of Takahichi, who is critical of raising interest rates at the Bank of Japan, following the LDP leadership election. This was a move to unwind excessively bought positions, indicating that the supply-demand adjustment phase may have concluded. On the other hand, there is a possibility that expectations for policies towards the Ishiba administration will increase again, likely leaning towards a stance of targeting buy opportunities on dips.

The Nikkei 225 futures closed at 38,210 yen, 280 yen higher than the daytime session. Although there were scenes where it was sold down to 37,860 yen at one point, the movement was generally within a narrow range around 38,000 yen, with attention being paid to the firmness. The yen exchange rate is fluctuating around 143 yen per dollar, and it is believed that the rebalancing movements in both the futures market and the foreign exchange market have come to an end.

Yesterday's Nikkei average stock price was sometimes below 37,800 yen, but the 25-day and 200-day moving averages are easily identified as support levels. By wiping out the previous week's gains in one go, it seems to be a timing for a fresh start. While aggressive upward movements are likely to be limited, amid increasing policy expectations, it is considered that buying positions are likely to accumulate at easily achievable levels.

■ Shimamura, 2Q operating profit increased by 4.1% to 31.4 billion yen

Shimamura <8227> announced its performance for the second quarter of the fiscal year ending February 2025, with revenue increasing by 4.3% year-on-year to 330.5 billion 95 million yen, and operating profit increasing by 4.1% to 31.4 billion 4 million yen. Slightly surpassing the consensus (around 30 billion yen). Expanding the lineup of in-house developed brands and jointly developed brands with suppliers to evolve brand power. Promoting the expansion of high-priced products in both brands, with strong performance in the "FIBER DRY" series of undergarments and outerwear using natural materials.

Materials of concern in the morning session

The NY Dow rose (42,330.15, +17.15).

The Nasdaq Composite Index rose (18,189.17, +69.58).

- Monthly labor statistics (July)

The Chicago Nikkei Futures rose (38,115, +185 compared to Osaka).

The VIX index decreased (16.73, -0.23).

Expectations for inflation to ease in the US.

Active share buybacks

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

Citizen Watch <7762> Group's machinery division will revamp its U.S.-exclusive automatic lathe, expanding worldwide from June next year.

Toyota Motor Corporation <7203> intensifies 'embracing' activities, focusing on on-site improvements alongside suppliers.

ENEOS <5020> starts operation of new plant and commences synthetic fuel manufacturing demonstration.

- Mitsubishi Chemicals <4188> reduces coke production, sells subsidiary shares to JFE Steel.

- Fujifilm <4901> invests 20 billion yen in semiconductor material equipment to expand domestic supply.

- Rohm <6963> considering collaboration with Denso for stable supply and development of semiconductors.

- Sumitomo Forestry <1911> acquires major Australian residence company for 11.3 billion yen.

- Rakuten Group <4755> considers capital alliance with Mizuho Financial Group for Rakuten Card.

- Daiken <6622> acquires US SIer, strengthens welding robot proposals for autos.

- Marubeni <8002> jointly owns ammonia transportation vessels with a Norwegian company through a joint venture.

- Proto Corp <4298> partners with CloudLone for used car loans on GooNet, starting this month.

Kubota <6326> accelerates sales of small construction machinery in Thailand, leveraging agricultural machinery sales network.

Laser Tech <6920> surface and internal defect high-speed detection device for SiC wafers.

Chiyoda HD <1963> jointly awarded basic design, LNG plant for Mozambique.

NEC <6701> conducts traffic volume survey with NTT and IOWN, utilizing optical fiber network.

Mitsubishi Electric <6503> mass produces power semiconductor chips with 12-inch wafers.

Sumitomo Chemical <4005> acquires majority stake, leading operation of regenerative and cell medicine development and manufacturing outsourcing business.

Tokyo Electric Power HD <9501> takes time for cause analysis, interrupts debris removal test at Fukushima Daiichi Nuclear Power Plant.

Kajima <1812> achieves 70% reduction in construction period, first introduces floor plate replacement system in actual construction.

・Asahi Kasei <3407> to improve the safety performance of EVs, using flame-resistant fibers in battery materials.

・DAICEL <4202> works with Hokkaido University's emerging technologies to implement organic synthesis in society.

・Toyo Construction <1890> plans to develop coal ash mixtures with companies like Tokyo Power Techno, with verification in two areas including Fukuoka.

☆ Schedule of events in the morning session

・08:30 August job availability rate (Estimate: 1.24 times, July: 1.24 times).

・08:30 August unemployment rate (Estimate: 2.6%, July: 2.7%).

・08:50 September BOJ Tankan for Large Manufacturers, Business Outlook Index (Estimate: +12, June: +13).

・08:50 September BOJ Tankan - Large Enterprise Non-Manufacturing Business Condition Assessment DI (Estimate: +32, June: +33)

・08:50 September BOJ Tankan - Large Enterprise Total Industry Capital Investment (YoY Estimate: +11.9%, June: +11.0%)

・08:50 Main opinions at the BOJ monetary policy meeting (September 19-20)

・10:30 Australian August Retail Revenue (MoM Estimate: +0.4%, July: 0.0%)