In the morning trading on the 21st, the following three points should be noted.

• Profit taking advantage, but attention is paid to the lower limit

• CYBOZU, upward revision on 24/12 for operating profit of 4.117 billion yen <-3.097 billion yen

• Focus of the morning: Sumitomo Corporation's acquisition of Romanian company for low environmental load fertilizer sales

• Profit taking advantage, but attention is paid to the lower limit

On the 21st, the Japanese stock market is likely to be in a stalemate. On the 20th, the US market saw the Dow Jones Industrial Average rise by 299 dollars and the Nasdaq fall by 140 points. While the rise in interest rates due to the decrease in new unemployment insurance claims was met with frustration, the number of housing starts and the Philadelphia Federal Reserve Bank's business outlook index showed economic slowdown, supporting speculation of a rate cut by the Federal Reserve Board (FRB) in the United States.

The Nasdaq index hit a record high in the morning but softened in the afternoon. Ahead of the triple witching where stock index futures, stock index options, and individual stock options coincide the following day, semiconductor Nvidia, which had been rising for several days, was sold, causing futures on the Nikkei 225 average to fall to 38,545 yen, Osaka comparison 65 yen lower. The yen against the dollar is hovering around 158.90 yen.

It is expected that selling will take the lead due to the attitude of bringing prices into line with Chicago futures. The Nikkei 225 futures were bought up to 38,710 yen in the night session, then sold down to 38,400 yen, but were bought back toward the end of trading to finish with a small drop of 38600 yen. Despite a bearish attitude, the stability of the lower side is likely to be emphasized. Heavy high-tech stocks, which have a large impact on the index, such as Tokyo Electron <8035> and Advantest <6857>, are likely to be subjected to profit-taking selling, adding to the burden on the Nikkei average. It is also likely that TDK <6762> and SoftBank G <9984>, which continue to show a strong trend, will be subject to profit-taking, but in the case of SoftBank G, overseas securities firms have been observing an upgrade, so there seems to be a strong willingness to buy on dips. Yesterday's Nikkei average stock price was in a range between -2σ and the 25-day moving average, sandwiched between the -1σ of the Bollinger band. As the -1σ is located around 38450 yen, buying on dips is expected when approaching that level, with anticipation of subsequent rebounds.

TDK<6762>, SoftBank G<9984>, and others that show a strong trend are also likely to be subject to profit-taking, but as overseas securities firms have observed an upgrade in SoftBank G, there seems to be a strong willingness to buy on dips. Yesterday's Nikkei average stock price was in a range between -2σ and the 25-day moving average, sandwiched between the -1σ of the Bollinger band. As the -1σ is located around 38450 yen, buying on dips is expected when approaching that level, with anticipation of subsequent rebounds.

In addition, while profit-taking is expected in high-tech stocks today, there is likely to be a steady inflow of funds into semiconductor stocks due to persistent growth expectations for AI-related industries. Furthermore, the appetite for seeking out PBR 1-fold undervalued stocks and high-dividend stocks is strong, so there is a possibility of a relatively strong support level being observed in a market that is weak in general.

• CYBOZU, upward revision on 24/12 for operating profit of 4.117 billion yen <-3.097 billion yen

CYBOZU＜4776＞ announces a revision to its earnings forecast for the December 2024 period. Sales are expected to be higher than the previous forecast due to the impact of factors such as the revision of the cloud service pricing system announced mainly on May 30, 2024 and the impact of exchange rate fluctuations, with sales revenue increasing from 28.730 billion yen to 29.545 billion yen. The main reason for the increase in profits is that expenses that were not consumed within the year, such as personnel expenses, have accumulated.

Materials of concern in the morning session

Nikkei average is up (38633.02, +62.26)

The NY Dow is up (39134.76, +299.90).

1 dollar = 158.90-00 yen.

US crude oil futures are up (81.29, +0.58)

Expectations for inflation to ease in the US.

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

• Sumitomo Corporation ＜8053＞ acquires Romanian company to sell low environmental load fertilizer

• Nippon Pusnes ＜5991＞ overhauls personnel system and promotes human capital management

• NTT ＜9432＞ to invest actively in growing businesses to boost performance and share price

• SoftBank G＜9984＞ to reconsider investment in LINE Yahoo and negotiate with Korean company

• Denso ＜6902＞ apologizes for fuel pump malfunction and works to improve technology to prevent recurrence

• Toyota Motor ＜7203＞ to stop operations of 5 domestic factories, aiming to resume production in the afternoon of the 21st

• Sony Group Corp ＜6758＞'s new image sensor facility in Kumamoto and Koshi to begin operation after full production in Nagasaki

• Sumitomo Rubber ＜5110＞ develops new radiation technology for tires to improve wear resistance in collaboration with Tohoku University

• Komatsu ＜6301＞ to develop underground excavation machines for rock salt and potassium by the end of the year

• President Yoshiyuki Aono of PulseTech Industry ＜6894＞ expands company's own products to account for 50%

• IHI ＜7013＞ and Thailand's electricity public corporation explore biofuel production

• Aerospace Electronics ＜6807＞ proposes redundant control system for drones

• Sojitz ＜2768＞ and Toshiba to demonstrate next-generation battery buses in Brazil

Tetsu Takahashi of Mabuchi Motor <6592> sees opportunities in self-driving and electrical components.

KDDI <9433> and SoftBank collaborate on ICT to support safe driving on the Shin-Tomei Expressway.

Mitsubishi Gas Chemical <4182> strengthens supply of bio-methanol, utilizing digester gas in Niigata.

Nittan Gelatin <4977> partners with Hokkaido University to develop high-speed spinning technology for collagen.

Nobuyuki Takagi of Arakawa Chemical Industries <4968> explores life sciences.

Nippon Electrical Porcelain <5334> achieves mass production of lead-free piezoelectric materials using MI technology.

☆ Schedule of events in the morning session

National Consumer Price Index (excluding fresh food) for May will be released at 8:30 (YoY estimate: +2.6%, April: +2.2%).

Not applicable.