In the afternoon trading of the 21st, we want to pay attention to the following three points.

・The Nikkei Average continues to rise, with buying interest focusing on the semiconductor sector.

・The dollar-yen is soft, keeping an eye on US interest rates.

・Advantest <6857> contributed the most to the price increase, followed by Tokyo Electron <8035> in second place.

■The Nikkei Average continues to rise, with buying interest focusing on the semiconductor sector.

The Nikkei average extended gains. It ended the morning session at 39,110.95 yen, up 129.20 yen (+0.7 billion shares traded approximately).

In the U.S. market last weekend, the Dow Jones Industrial Average closed at 43,275.91, up $36.86, while the Nasdaq closed at 18,489.55, up 115.94 points. The Dow traded weakly due to profit-taking from near record highs and a retracting optimistic economic view. The Nasdaq was buoyed by the rise of mobile device giant Apple (AAPL) and semiconductor company Nvidia (NVDA), as well as a boost from declining long-term interest rates, keeping the market robust and pushing overall market prices upwards. Towards the end of trading, the Dow also regained the positive territory, setting new record highs for several consecutive days.

While keeping an eye on the rising U.S. stock market, the Chicago Nikkei 225 futures settlement price closed at 39,170 yen, up 160 yen compared to Osaka. Today's Nikkei average started with some selling pressure, but later scenes showed recovery into positive territory, supported by buying in the semiconductor sector.

Individually, maritime shipping stocks like Kawasaki Kisen (9107) and Nippon Yusen (9101), as well as semiconductor-related stocks like Lasertec (6920) and Toyo Electric (8035), performed strongly. Also, entities such as Kasumigaseki Capital (3498), Rakuten Group (4755), SoftBank Group (9984), Keyence (6861), Recruit Holdings (6098), and Nintendo (7974) saw increases. Furthermore, Sanwa Holdings (5929), which upwardly revised its first half earnings forecast, and Tradeworks (3997), which announced the introduction of a shareholder benefit program, surged, along with Jaytech Corporation (3446), Sunwells (9229), and PKSHA (3993), leading the list of price gainers.

On the other hand, banking stocks like Sumitomo Mitsui (8316) and Mizuho (8411), as well as automobile-related stocks like Toyota Motor (7203) and Honda (7267), traded weakly. Additionally, First Retailing (9983), Mitsubishi Heavy Industries (7011), IHI (7013), Kawasaki Heavy Industries (7012), and JT (2914) declined. Oriental Securities (8614), which had a negative outlook for the first half operating profit, and Thirty-One Ice Cream (2268), which saw a sense of exhaustion despite an upward revision in full-year performance forecast, suffered sharp declines. Others like Hokuriku Electric Power (9505), Baycurrent (6532), and Hokkaido Electric Power (9509) were among the top decliners.

In terms of global sectors, marine transportation, rubber products, and precision instruments saw increases, while electrical utilities, gas & electricity, fisheries & forestry, and banking sectors experienced declines.

The afternoon Nikkei stock price is expected to continue with a heavy resistance on the upside. With the recent sluggishness in the prime market trading volume dropping below 4 trillion yen and lackluster performance, the highs of 40,257.34 yen on the 15th and the closing price of 39,910.55 yen are being viewed as immediate resistance levels. Despite the gradual weakening of the yen and strengthening of the dollar, there is no tailwind for export-related stocks. Key earnings reports of major companies in the U.S. and the upcoming earnings season domestically are leaving Japanese stocks with limited fresh catalysts.

Furthermore, in the upcoming election for the House of Representatives on the 27th, there is speculation that the Liberal Democratic Party may fall below an absolute majority for the first time in 15 years. Also, with the Cabinet of Mr. Ishiba registering a historical low support rate of 28% post-inauguration since 2000, indicating a harsh situation, the sense of policy expectations remains subdued, and there is little 'buying ahead of elections' sentiment. Foreign investors, who prefer political stability, are likely holding back their purchases, leading to a continued trend of reluctance to tilt their holdings positively.

The dollar-yen is soft, keeping an eye on US interest rates.

In the morning of the 21st in the Tokyo market, the dollar-yen was weak. Dollar selling took the lead due to the decline in the US 10-year bond yield, dropping from 149.64 to 149.10 yen. There were also scenes where the Nikkei Stock Average showed weakness, leading to yen buying pushing down major currencies. After that, it traded somewhat sluggishly downwards.

The trading ranges so far are as follows: dollar-yen from 149.10 yen to 149.64 yen, euro-yen from 162.02 yen to 162.63 yen, euro-dollar from 1.0864 dollars to 1.0871 dollars.

Check stocks for the afternoon session

・I'Partners Financial <7345>, Geocode <7357>, etc., 3 stocks hit the daily upper price limit.

*Includes temporary stopper (indicated price)

・Advantest <6857> contributed the most to the price increase, followed by Tokyo Electron <8035> in second place.

Economic indicators and remarks by important people

[Economic indicators]

・USA: September residential construction permits: 1.428 million units (Forecast: 1.46 million units, August: 1.47 million units).

・USA: September housing starts: 1.354 million units (Forecast: 1.35 million units, August: 1.361 million units)

・USA・September monthly fiscal balance: +64.263 billion dollars (Forecast: 60 billion dollars, September 2023: -170.715 billion dollars)

[Important Person's Remarks]

-Bostic, President of the Federal Reserve Bank of Atlanta.

"There is a possibility of restraining investment activities and household spending due to the uncertainty of the election."

"There is no rush to return to the neutral interest rate."

Not applicable.

Not applicable.