Focus is limited to earnings stocks such as financial results and Tokyo Metro.

This week, the Nikkei average fell by 1067.83 yen (-2.74%) to 37913.92 yen on a weekly basis. With the upcoming House of Representatives election scheduled for October 27, the ruling party coalition of the Liberal Democratic Party and Komeito is struggling. Reports of a potential fall below the majority threshold from various media outlets have led to rising uncertainties concerning economic and financial policies. Interest has increased in earnings reporting stocks such as Tokyo Metro <9023> and Nidec <6594>, which were listed on the 23rd, but there has been no widespread buying, and the Nikkei average has consistently left lower shadows for 11 consecutive days until October 23, highlighting the bearish sentiment.

As the Nikkei average steadily declined, active buying was withheld, and the closing price fell below 38,000 yen for the first time since October 2. Trading volume in the main board market remained sluggish at around 3 trillion yen daily. In the foreign exchange market, the dollar-yen rate temporarily touched the 153 yen per dollar level, with the yen weakening by about 4 yen against the dollar for the week. However, the impact on export-related stocks was limited.

According to the investment trends by investor type for the third week of October, foreign investors sold 45.7 billion yen worth of stocks and sold 329.5 billion yen worth of TOPIX futures and 225 futures due to the depreciation of the yen. On the other hand, individual investors bought a total of 102.5 billion yen, including 63 billion yen in stocks. Corporations sold 150.4 billion yen worth of stocks.

Despite the yen depreciation, it did not serve as a tailwind for Japanese stocks.

The U.S. stock market on the 25th was mixed. The Dow average closed at 42,114.40, down 259.96 points from the previous day, while the Nasdaq ended at 18,518.60, up 103.12 points. In the night session of the TSE, the Nikkei 225 futures closed at 38,070 yen, up 60 yen from the previous day's close. The dollar-yen exchange rate remained in the lower 152 yen range.

While the yen continues to weaken in the foreign exchange market, aggressive buying has been restrained. Toyota Motor Corp <7203>, Honda <7267>, and other automobile stocks have been bought to a certain extent. However, the strong trend of "yen depreciation and stock price appreciation" seen in the first quarter of this year did not materialize. Due to increasing uncertainty about the election results, it is believed that foreign investors are maintaining a wait-and-see stance. Depending on the outcome of the election on the 27th, if the ruling coalition falls below the majority, there is a possibility of further stock market declines and increased demand for yen as a safe-haven asset. On the other hand, if the ruling coalition unexpectedly receives a significant number of votes and maintains its majority, Japanese stocks are likely to rise on buying back.

On November 5th, the United States will have a presidential election, and domestically, with the upcoming extension of trading hours for the Tokyo market, there may not be a swift recovery to the 40,000 yen level for the Nikkei, but awareness is likely to shift to the 39,000 yen level once existing uncertainties and vigilance are dispelled.

At the Bank of Japan's meeting, the 'Outlook Report' will also be disclosed.

From the 30th to the 31st, the Bank of Japan will hold a monetary policy meeting. Ahead of this, at the G20 Finance Ministers and Central Bank Governors Meeting, BOJ Governor Kuroda stated that "The Bank of Japan is maintaining a considerably accommodative stance and wants to raise inflation expectations to a new level" and emphasized the importance of focusing on an appropriate normalization scale in total. Although there is almost no speculation about raising the policy interest rate at this meeting, attention is likely to turn to the possibility of a positive attitude towards additional rate hikes through the 'Outlook Report' on economic and price developments to be announced simultaneously and Governor Kuroda's press conference after the meeting.

Due to the volatile fluctuations in the financial markets from July to August, the Bank of Japan has strengthened its 'dovish' tone. At the September meeting, Governor Kuroda emphasized the need for 'time flexibility' in the decision to raise rates, while communicating closely with the market. However, the situation has changed, with the widening of the interest rate spread between Japan and the United States leading to a resumption of the trend of a weaker yen and a stronger dollar. With the year's biggest event, the U.S. presidential election, approaching, it is unlikely that the Bank of Japan will shift suddenly from 'dovish' to 'hawkish' but the focus will be on whether the Bank of Japan will change its stance to 'on track' or not.

On the 1st, U.S. employment statistics and ISM Manufacturing Business Activity Index will be released.

Next week in Japan, the schedule includes September employment statistics on the 29th, October Consumer Attitude Index on the 30th, Bank of Japan Policy Interest Rate and September Industrial Production (preliminary figures), retail sales of the retail trade in September, etc. On the international front, on the 29th, Germany's GfK Consumer Confidence Index for November, U.S. wholesale inventories for September (preliminary figures), August Home Price Index, S&P Case-Shiller Home Prices (20 cities), JOLTS Job Openings for September, Conference Board Consumer Confidence Index for October, Australia's Consumer Price Index for the third quarter, Japan's Consumer Price Index for September, Germany's Real GDP for the third quarter (preliminary figures)...

In the upcoming days, various economic indicators and data from different countries will be released including the U.S. ADP Employment Report, U.S. GDP for the third quarter (preliminary figures), Eurozone Consumer Confidence Index for October, Eurozone Real GDP for the third quarter, U.S. Personal Income, PCE Deflator, new jobless claims, Chicago Purchasing Managers' Index for October, China's Caixin Manufacturing PMI for October, Turkey's Manufacturing PMI for October, U.S. Manufacturing PMI, ISM Manufacturing Business Activity Index, and more.