In the early trading session on the 16th, three key points are worth noting.

■ The SQ value is likely to be recognized as a Resistance.

■ Askul's operating profit for the second quarter decreased by 16.8% to 6.028 billion yen.

■ Focus points for the early session: Omron introduces AI in response to tariffs, reducing working hours by half.

■ The SQ value is likely to be recognized as a Resistance.

The Japanese stock market on the 16th seems to be set for a stagnant mood while waiting for financial events, but a resilient market development is expected. In the US market on the 13th, the Dow Jones Industrial Average fell by 86 points, while Nasdaq rose by 23 points. The Dow has declined for seven consecutive days, pressured by selling related to the expectation of a slower pace of rate cuts by the Federal Reserve. Conversely, the Nasdaq index rose as Broadcom's surge spread to other semiconductor stocks, updating its record high. The Chicago Nikkei 225 Futures (March) settlement price was 39,570 yen, 100 yen higher than Osaka. The yen is trading around 153.60 yen per dollar.

The Nikkei average is expected to start slightly on the buy side, adjusting relative to the Chicago futures. Although the Dow has dropped for seven trading days, adjustments are being made in anticipation of the Federal Open Market Committee (FOMC) meeting. While economically sensitive stocks are being sold off, some tech stocks are being bought, indicating a focus on rebalancing. Regarding Broadcom, it's likely already priced in as of last Friday, but with a rise of over 24%, it may lead to a reassessment. Given the strong movement in the SOX index, it is thought that money is likely to flow into tech stocks, which have a significant index impact.

Semiconductor stocks continue to show unstable price movements due to concerns over US-China tariffs, and positions seem to lean towards Sell. However, currently, Advantest <6857> is strengthening its rebound trend, and there may be a possibility of buybacks entering other semiconductor stocks ahead of the FOMC. Additionally, as the exchange rate remains in the mid-153 yen range per dollar, money inflow into export-related sectors like Automobiles and Machinery is likely to be closely monitored.

Last weekend, the Nikkei average stock price fell to 39,247.41 yen in the latter half of the morning session, but afterwards, the decline was reduced, closing above December's SQ value (39,434.85 yen). The Nikkei 225 Futures saw a momentary drop to 38,450 yen in the night session but rebounded to close at 39,600 yen towards the end. With the SQ value likely to act as a Resistance, there seems to be strong buying intent waiting for a dip as market players aim for a breakout after passing the financial events. Additionally, after the financial events, renewed expectations for the upcoming Trump administration may suggest a year-end rally.

■ Askul's operating profit for the second quarter decreased by 16.8% to 6.028 billion yen.

The performance for the second quarter of the fiscal year ending May 2025 announced by Askul <2678> showed a revenue of 237.9 billion yen, an increase of 2.9% compared to the same period last year, and an operating profit of 6.28 billion yen, a decrease of 16.8%. In the E-Commerce business, all segments showed steady growth; however, alongside a decline in the gross profit margin due to foreign exchange effects and an increase in fixed costs related to rent for the ‘ASKUL Kanto DC,’ there was an increase in revenue with a decrease in profit.

■ Key materials for the first half of the trading session

The Nasdaq Composite Index rose (19,926.72, +23.88).

1 US dollar equals 153.60-70 yen.

Chicago Nikkei Futures rose (39,570, +100).

The SOX Index rose (5,149.78, +167.59).

The VIX Index has decreased (13.81, -0.11).

US crude oil Futures have increased (71.29, +1.27).

Active share buybacks

• The Tokyo Stock Exchange's request for corporate value enhancement

Omron <6645> introduces AI for tariff compliance, reducing work time by half.

Asahi Kasei <3407> studies "battery durability, etc.,” creating proposal-based Business.

Mitsubishi Electric Corp. Unsponsored ADR <6503> invests 22 billion yen in an air conditioning factory in the USA, repurposing it for automotive electrical components.

NTT Data G <9613> receives a system development request, using generative AI to extract risks for domestic purposes.

Sojitz <2768> acquires renewable energy in Ireland, targeting Europe's decarbonization demand.

Mitsubishi Heavy Industries <7011> wins orders for Australian patrol vessels, with the Ministry of Defense launching a public-private joint organization.

NTT <9432> NTT West Japan demonstrates the resolution of remote 'delays,' enabling interactions similar to face-to-face communication.

Toyota Boshoku <7282> deepens its presence in India, focusing on high-value-added products.

DMG Mori Seiki <6141> obtains IEC third-party certification to enhance security quality.

Tadano <6395> President Toshiaki Ujiie discusses cranes and opportunities overseas.

Dai Nippon Printing <7912> begins offering evaluation photomasks for semiconductors following the 2-nanometer generation.

Hitachi <6501> receives orders for five circuit breakers that do not use 'SF6.'

• Shikibo Co., Ltd. <3109> increases production of traditional ethnic fabric for Middle Eastern "thobes" in Aichi by 1.5 times.

• INPEX <1605> participates in CO2 storage project in Norway with Idemitsu Kosan.

• Kansai Electric Power <9503> utilizes hydrogen from nuclear power for co-firing demonstration in Himeji, offering a low-cost and promising option.

• Kansai Electric Power <9503> will participate in German offshore wind power, installing 21 foundation-type turbines in the Baltic Sea.

• Nippon Yakin Kogyo <5480> improves efficiency in cold rolling, completing a new building in Kawasaki.

• AGC <5201> starts trial sales of retrofitted Photovoltaic Technology Glass.

☆ Morning event schedule

< Domestic >

・08:50 October Core Machinery Orders (month-on-month estimate: +1.0%, September: -0.7%)

・11:00 China November Industrial Production (year-on-year estimate: +5.4%, October: +5.3%)

・11:00 China November Retail Sales (year-on-year estimate: +5.0%, October: +4.8%)