In the morning trading of the 28th, we want to pay attention to the following three points:

Potential increase in selling pressure from overseas investors.

Hitachi Construction Machinery, downward revision on 25/3, operating profit 151 billion yen←165 billion yen

Key points of the morning session: Kawasaki Heavy Industries, electrical stability in Palau, establishment of business model, expansion to island countries.

Potential increase in selling pressure from overseas investors.

On the 28th, the Japanese stock market is expected to be cautious about turbulent market developments. The US market on the 25th saw the Dow Jones Industrial Average fall by 259 points, while the Nasdaq rose by 103 points. The October US Michigan Consumer Sentiment Index exceeded expectations, with some scenes of buying expectations from the soft landing. However, the rise in US long-term interest rates became burdensome, leading the Dow Jones to turn downward. On the other hand, the Nasdaq index was boosted by expectations of high-tech companies' earnings, leading to a sense of reassurance as large tech stocks were bought. The Chicago Nikkei 225 futures settlement price was 85 yen higher than Osaka at 38,095 yen. The exchange rate is fluctuating around 153.00 yen per dollar.

The Nikkei Average is expected to start with selling pressure after the ruling party fell below the majority in the House of Representatives election. Last week, there were scenes of recovering to 39,100 yen at the beginning of the week, but afterwards, the increased political risk led to selling down to the 37,700 yen level. With expectations of the ruling party falling below the majority, there had been some anticipation priced in. However, amidst concerns about future political risks, there is a possibility of increasing selling pressure from overseas investors.

If a temporary stop in the decline is seen after the initial selling, it is expected to lead to a stronger breakout momentum. However, with the upcoming US presidential election next week, expectations for breakout buying are likely to be limited. There are views that positions aiming for the victory of former President Trump in the US presidential election have accumulated to some extent, which could lead to continued volatile price movements in the US. Additionally, as earnings announcements intensify, there is a growing mood to assess the earnings reports. Especially this week, earnings announcements are scheduled for large tech stocks and semiconductor stocks in the US. If there are consecutive earnings announcements above expectations from high-tech companies, it is likely to become a significant support factor for high-tech stocks, but there may be limited aggressive upward movements.

Furthermore, as earnings announcements intensify, there is a tendency to pay closer attention to the earnings details. Particularly this week, there are scheduled earnings announcements for large tech stocks and semiconductor stocks in the US. If there are earnings announcements that exceed expectations from high-tech companies, it seems that it could be a strong factor supporting the index impact on high-tech stocks, but there may be limited potential for aggressive upward moves.

First, it will be necessary to determine the end of the decline due to the dissatisfaction with the ruling party's loss of the majority in the Lower House election. Investors are likely to focus on individual-funded funds such as small and medium-sized IT-related companies to avoid the impact of selling related to indices. In addition, specific responses based on earnings will be taken. Regarding the companies that announced earnings over the weekend, Chugai Pharmaceutical <4519>, Menicon HD <3199>, Imuraya Group <2209>, Waseda Academy <4718>, Amano <6436>, Technosmart <6246>, Oimatsu Construction <1814>, Fukui Bank <8362>, Ogaki Bank <8361>, and others are drawing attention.

Hitachi Construction Machinery, downward revision on 25/3, operating profit 151 billion yen←165 billion yen

Hitachi Construction Machinery <6305> announced a revision of its financial estimates for the fiscal year ending March 2025. Revenue is revised downward from 1.37 trillion yen to 1.35 trillion yen, and operating profit from 165 billion yen to 151 billion yen. This adjustment incorporates the impact of the Federal Reserve's rate cut progressing at a slower pace than expected, causing a delay in the recovery of hydraulic shovel demand.

Materials of concern in the morning session

The Nasdaq Composite Index is up (18518.61, +103.12).

・1 Dollar = 152.80-90 Yen

The Chicago Nikkei Futures are up (38095, +85 compared to Osaka).

The SOX Index is up (5212.83, +55.22).

US crude oil futures are up (71.78, +1.59).

Expectations for inflation to ease in the US.

Active share buybacks

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

Kawasaki Heavy Industries <7012> stabilizes electrical utilities in Palau, establishes business model, and expands operations to island nations

Toppan <7911> acquires a company in Sweden, strengthening security

Toyota Motors <7203> shortens the production suspension period at Daihatsu, suppresses the loss of order opportunities

Mitsui&Co. <8031> acquires McDonald's delivery services, integrating expertise from three Japanese and **** companies.

Itochu <8001> invests in American health food, targeting demand in emerging Asian countries.

Broadleaf <3673> President Kenji Oyama supports the digitization of the automotive aftermarket.

Toyota Industries<7203> establishes an organization to promote resource circulation, collaborating with 10 group companies.

Seino Holdings <9076> conducts drone logistics trial in Shimane, in collaboration with Aeronext.

Mitsubishi Heavy Industries <7011> grants turbocharger license to a Chinese company through Mitsubishi Heavy Industries Marine Machinery.

Fujitsu<6702> improves the quality of 5G networks with AI for global deployment in the mobile sector.

Rakuten Group <4755> Rakuten Mobile introduces major companies to Rakuten's 30 gigabyte plan.

Nomura Institute of Research Co., Ltd. <4307> AI generated for online negotiations, compliance check and procedure confirmation.

Fuji Electric Co., Ltd. <6504> Power supply from land to moored ships, container-type equipment.

Obayashi Corporation <1801> TechShare and robot efficiency utilization system, automatic power supply to different specifications.

Kansai Electric Power Co., Ltd. <9503> Partnership agreement with Akō City, Hyōgo to promote decarbonization by abolishing thermal power.

Taisei Corporation <1802> Promoting the recycling of building materials, visualizing the effect of reuse.

☆ Schedule of events in the morning session

Not applicable.

Not applicable.