The Nikkei average continues to decline. It ended the morning session at 38,033.22 yen, down 319.12 yen (-0.83%) from the previous day, with an estimated volume of 830 million shares traded.

The U.S. stock market on the 20th was mixed. The Dow Jones rose 139.53 points to 43,408.47, while the Nasdaq closed at 18,966.14, down 21.33 points. Reports of Ukraine launching British-made long-range missiles into Russian territory raised concerns about geopolitical risks, causing a decline after the opening. Federal Reserve Board (FRB) member Bowman expressed a hawkish stance on inflation stagnation, prompting selling due to aversion to rising long-term interest rates. However, attention was drawn to Nvidia's earnings announcement, which is expected to lead the market in semiconductors, and this led to late buying up on Dow, turning the trend positive. The Nasdaq also narrowed its decline but failed to return to the positive territory, closing mixed.

In the earnings report for nvidia for the period from August to October announced just after 6 AM Tokyo time, revenue was $35.082 billion, surpassing market financial estimates of $33.162 billion. Furthermore, the adjusted earnings per share also exceeded the market financial estimates at $0.81 against the expected $0.75. On the other hand, a forecast for fourth-quarter revenue of $37.5 billion was provided. Although this exceeded the market financial estimates of $37 billion, the upward revision was slight, causing nvidia's stock price to drop by about 5% in extended hours trading after the announcement.

The Tokyo market started trading with little movement, but following the earnings reports from nvidia and the trends in extended hours trading, semiconductor-related stocks like Advantest <6857> and Disco <6146> widened their declines, causing the Nikkei average to gradually increase its losses. There was even a moment when it briefly fell below 38,000 yen. However, due to expectations of additional interest rate hikes by the Bank of Japan, mega bank and other bank stocks generally rose. Relatively, as TOPIX remained stable, the Nikkei average avoided a sharp drop, showing consolidation around the 38,000 yen level.

In the stocks included in the Nikkei average, aside from Advantest and Disco, semiconductor stocks such as Socionext <6526> and Screen HD <7735> were sold off, as well as defense-related stocks like IHI <7013> and Mitsubishi Heavy Industries <7011>. Additionally, other stocks such as Sumitomo Realty <8830>, Fast Retailing <9983>, Hoya <7741>, Mitsukoshi Isetan <3099>, and Sony Group Corp <6758> were also sold.

On the other hand, the three major electric wire companies, Sumitomo Electric <5802>, Fujikura <5803>, and Furukawa Electric <5801> were all bought, and positive reports from brokerage firms also influenced the rise of Pacific Cement <5233>. Based on expectations of additional interest rate hikes by the Bank of Japan, stocks in the Mitsui Sumitomo Trust Group <8309>, Mizuho <8411>, Fukuoka <8354>, and Shizuoka FG <5831> were also bought. Additionally, UBE <4208>, Kyowa Kirin <4151>, Mitsui Mining <5706>, and Tokyo Gas <9531> saw increases.

By global sectors, mining, precision instruments, machinery, retail, and pulp & paper saw declines, while nonferrous metals, banks, textiles, fisheries & agriculture, and other finance sectors saw increases.

During lunch hour, the exchange rate was around 155 yen per dollar, which is about 30 sen stronger for the yen compared to the morning. Currently, there have been no observations of stock trading influenced by exchange rate trends, so the effects of a stronger yen against the dollar are considered limited. In the afternoon, the lackluster trends of semiconductor stocks influenced by the nvidia earnings will weigh on the Nikkei average. Expect a quiet battle at the 38,000 yen level.