In the morning session of 18 days, I want to focus on the following three points.

In anticipation of the FOMC results, short-term trading is the main focus.

Estelle, 2Q operating loss decreased to ▲0.317 billion yen.

Highlights of the morning session: Toyota, Lexus 'UX' production ends, focusing on next-generation EVs.

In anticipation of the FOMC results, short-term trading is the main focus.

The Japanese stock market on the 18th is likely to exhibit a strong sense of consolidation. On the 17th, the US market saw the Dow Jones Industrial Average fall by 267 points, and the Nasdaq decreased by 64 points. The retail sales for November, announced in the morning, exceeded market expectations, and although there is no change in the view that the Federal Reserve will lower interest rates at the Federal Open Market Committee (FOMC), it led to speculation that the pace of rate cuts in 2025 will become more gradual. Amidst waiting for the FOMC results, selling due to position adjustment became predominant. The clearing value of the Chicago Nikkei 225 Futures (March) was 39,255 yen, down 145 yen from Osaka. The yen exchange rate fluctuated around 153 yen and 40 sen per dollar.

The Nikkei average is likely to start slightly lower in a way that is correlated to the Chicago futures. In the US, with the Dow Jones Industrial Average declining for nine consecutive trading days, aggressive trading is expected to be subdued. However, since the Nasdaq updated its highest price the previous day, it’s a place where profit-taking is likely to occur, and while economically sensitive stocks are being sold, some tech stocks are being bought, indicating ongoing rebalancing. Yesterday, Advantest <6857> saw a notable decline, but it is viewed as a cashing-out sale for the listing of Kioxia Holdings <285A> today, so if it shows signs of stabilizing after the wave of selling, it may lead to a sense of security.

The Nikkei 225 Futures were sold down to 39,210 yen during the night session and fell below the +1σ of the Bollinger Band, which was perceived as a support line. In the short term, it is easier to see movements that are speculative on selling, and there may be moments approaching the key level of 39,000 yen. However, while waiting for the FOMC results, it is considered that trading will remain short-term, and there is a desire to adopt a wait-for-a-correction stance. Although US retail sales exceeded expectations, there is a cautious anticipation of the impact of tariffs from the incoming Trump administration, which may have prompted preemptive purchases. Therefore, the speculation of interest rate cuts in the US remains strong, and a release of pressure post-FOMC is anticipated.

Interest is likely to gather around Kioxia Holdings. However, if it softens after the initial price formation, funds may shift towards other Semiconductors. Additionally, trading seems to center on short-term price fluctuations in stocks that have individual material or thematic stories.

Estelle, 2Q operating loss decreased to ▲0.317 billion yen.

Esterl <7872> announced that for the second quarter of the fiscal year ending March 2025, revenue decreased by 0.8% year-on-year to 14.9 billion 33 million yen, and the operating loss was 0.3 billion 17 million yen (compared to a loss of 0.3 billion 65 million yen in the same period last year). In the jewelry segment, efforts to enhance communication with customers, such as the 70th-anniversary campaign, and the strengthening of personnel development were made, but the impact on the jewelry segment remained limited. In the eyewear segment, due to a review of marketing strategies at stores and strengthened personnel development, the wholesale business in overseas subsidiaries grew.

■ Key materials for the first half of the trading session

Long-term US interest rates fell.

Active share buybacks

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

Toyota Motor Corporation <7203> will cease production of the Lexus 'UX' and focus on next-generation EVs.

Honda aims to double HV sales by around 2030, with global sales projected at 1.3 million units per year.

Sumitomo Pharma and Sumitomo Chemical are establishing a new company in regenerative and cellular medicine, targeting a scale of 350 billion yen in the late 2030s.

Tokyo Gas has reached an agreement with McDonald's to supply renewable energy to 75 stores in the Kanto region.

Japan Explored sold its real estate business to Mitsubishi Chemical Group for a transfer amount of 20.3 billion yen.

Sumitomo Corporation has acquired a company in Indonesia, focusing on large pump rentals for mining.

Denso is strengthening cooperation in advanced driving assistance and ensuring stable semiconductor supply with a US company.

SoftBank Group's Son has declared a 15 trillion yen investment in the US and is set to meet with Trump, the next US president.

Honda is pursuing its essence, creating next-generation HVs that can be enjoyed through the five senses.

· TORAY INDS INC supports the practical application of a Lithium Battery with double capacity, initiated by Nagoya University.

· Isuzu Motors consolidates its Kenya sales corporation with UD Trucks, establishing a new base in Mombasa.

· Ishihara Sangyo introduces wire discharge machines, accommodating large and ultra-precision processing.

· Seibu Electric opens a new precision factory at its headquarters, increasing production capacity by 1.5 times.

· Okuma establishes a processing consultation office in Kumamoto, developing demand for Semiconductors.

· JFE Engineering completes CO2 terrestrial equipment for liquidification, storage, and handling in an integrated manner.

· NTT Docomo pushes forward with Open RAN initiatives, conducting demonstrations in Peru and Southeast Asia.

· Kddi Corporation enhances the disaster response capability of base stations, monitoring the remaining capacity of the Rechargeable Battery.

・LaserTech <6920> begins accepting orders for EUV exposure template evaluation devices, detecting microscopic phase defects.

・ENEOS <5020> artificial petroleum from CO2, aiming for a liquid yield of 80%.

・TORAY INDS INC <3402> to mass-produce CO2 separation membranes by 2026, introducing pilot facilities in Shiga.

・Achilles <5142> plating on semiconductor glass substrates, achieving high adhesion with polypyrrole.

・Oji HD <3861> promoting the development of Photoresist, utilizing wood-derived materials.

・Toyo Spinning <3101> Toyo Spinning MC, 'hollow fiber type membrane' adopted in China, used in Lithium recovery processes.

☆ Morning event schedule

< Domestic >

・Bank of Japan Monetary Policy Meeting (until 19th)

・08:50 November Trade Balance (Financial Estimates: -687.9 billion yen, October: -462.1 billion yen)

・ Nothing special