In the trading session on the 19th, I would like to focus on the following three points.

・The Nikkei average declined for five consecutive days, with selling pressure dominating due to falling U.S. stocks, but it shows some resistance to the decline.

・The dollar-yen exchange rate remains firm, with yen selling following the Bank of Japan's decision to refrain from raising interest rates.

・The top contributor to the decline is ADVANTEST <6857>, and the second is SOFTBANK GROUP CO <9984>.

■The Nikkei average declined for five consecutive days, with selling pressure dominating due to falling U.S. stocks, but it shows some resistance to the decline.

The Nikkei average has declined for five consecutive days. It ended the morning session down 373.33 yen (-0.96%) at 38708.38 yen, with an estimated volume of 1.2 billion shares.

The U.S. stock market continued to decline on the 18th. The Dow Jones Industrial Average dropped by 1123.03 dollars to 42326.87 dollars, while the Nasdaq fell by 716.37 points to 19392.69 points. With the Federal Open Market Committee (FOMC) results announcement approaching, there was a strong sense of wait-and-see, and the market fluctuated after the opening. While the Dow average had continued to decline until the previous day, it saw buying in some major stocks, leading to a rise, whereas the Nasdaq started off with a slight decline. As expected, the main policy interest rate was lowered by 0.25%, but the decrease in the forecast for interest rate cuts in 2025 from previous estimates led to disappointment and a decline. Subsequently, with the rise in long-term interest rates, the extent of the decline widened.

In response to the significant drop in U.S. stocks, the Tokyo market also began trading with selling pressure. The Nikkei average experienced a drop of over 700 yen at one point compared to the previous day, but after the selling subsided, it gradually reduced the extent of the decline. There is a growing view that the results of the Bank of Japan's monetary policy meeting, announced today, are likely to keep interest rates unchanged, which appears to be providing reassurance to the market. The rise in U.S. interest rates has also supported the currency, with the exchange rate at around 154 yen to the dollar, indicating a weaker yen compared to the previous day.

In the Nikkei Average constituent stocks, following a significant decline in Nasdaq, Semiconductor stocks such as SOFTBANK GROUP CO <9984>, ADVANTEST <6857>, SOCIONEXT <6526>, LASERTEK <6920>, and Tokyo Electron Ltd. Unsponsored ADR <8035> are generally lower. Additionally, some Automobiles stocks like MITSUBISHI MOTORS <7211> and MAZDA MOTOR CRP <7261>, which were favored for buying yesterday, have declined, while HONDA <7267> continues to drop, setting a new year-to-date low. Furthermore, A-REIT ETF stocks like TOKYO TATEMONO <8804>, SUMITOMO REAL ESTATE <8830>, MITSUBISHI ESTATE <8802>, and MITSUI FUDOSAN <8801> are weak.

On the other hand, NISSAN MOTOR <7201>, which hit the price limit yesterday, fluctuated wildly and at one point fell into the negative territory compared to the previous day before rising. Marine Shipping stocks like KAWASAKI KISEN <9107> and NYK LINE <9101> were also bought. In addition, IHI <7013>, YAMATO HD <9064>, NTN <6472>, SUMITOMO CHEMICAL <4005>, ASAHI <2502>, and Canon Inc-Spons Adr <7751> saw gains.

By sector, Electric Appliances, Nonferrous Metals, A-REIT ETF, Petroleum and Coal Products, and Electric Appliances experienced declines, while Marine Shipping, Other Products, Warehouse and Transport-related, Textiles, and Food Products rose.

The market is watching for around what time the results of the Bank of Japan's monetary policy decision meeting will be reported. Due to the thorough examination of the FOMC results announced in the early hours and the discussions on the 'Multifaceted Review' summarizing the unconventional monetary easing policies implemented over the past 25 years since 1998, the announcement is expected to be delayed. In the market, there may also be reactions in the futures and currency markets based on the anticipation of a later announcement time. The latter half of the Tokyo market may display rough price movements due to speculative trading. The Nikkei Average has the possibility of turning around sharply or declining further, hence caution is advised against volatility.

■ The dollar-yen is firm, with yen selling after the Bank of Japan decides to hold off rate hikes.

In the Tokyo market on the morning of the 19th, the dollar-yen pair showed a firm trend, rising from 154.44 to 155.27 yen. Following the drop in Japanese stocks, yen buying initially dominated. However, when the Bank of Japan decided to hold off on additional rate hikes at the monetary policy decision meeting, yen selling became dominant, pushing up major currencies.

The trading range so far has been: dollar-yen at 154.44 to 155.27, euro-yen at 159.85 to 161.19, and euro-dollar at 1.0347 to 1.0390 dollars.

■ Stocks to check in the latter half.

Eight stocks, including Fujita Corporation and And Do Holdings, reached the daily limit up.

This includes the temporary limit high (response value).

・The top contributor to the decline is ADVANTEST <6857>, and the second is SOFTBANK GROUP CO <9984>.

Economic indicators and remarks by important people

[Economic indicators]

In the U.S., the number of housing starts in November was 1.289 million units (estimate: 1.345 million units, October: 1.312 million units, revised from 1.311 million units).

In the U.S., the number of housing construction permits in November was 1.505 million units (estimate: 1.43 million units, October: 1.419 million units, revised from 1.416 million units).

In the U.S., the current account balance for the July to September period was -310.9 billion dollars (estimate: -287.1 billion dollars, April to June: -275 billion dollars, revised from -266.8 billion dollars).

Key Person Statements

• Powell, the Chairman of the Federal Reserve, USA

"The labor market is no longer as tight as it was in 2019."

"There is a possibility of strengthening a cautious stance when considering additional adjustments."

"Interest rates have come remarkably close to neutral levels."

"Policies are still considered significantly restrictive."

"Some members have reflected potential policy changes in their forecasts."

"Being close to neutral is another reason to be cautious."

< Domestic >

Bank of Japan concludes its financial policy meeting.

- 3:30 pm: Mr. Ueda, Governor of the Bank of Japan, will hold a press conference.

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