[Tokyo 14eg Reuters]-
With the US Consumer Price Index (CPI) outperforming market expectations and the core index continuing to rise, it is difficult to be bullish on stocks in the near term. On the domestic demand side, rising wages and appropriate rents are ongoing, and the pace of slowing inflation is likely to be slower than initially expected by the market.
However, there is no need to be too pessimistic. Naturally, there are some pros and cons to market expectations. The underlying trend is not unnatural, and the rate of year-on-year increase was lower than the previous month.
US stocks may have overreacted a bit ahead of this week’s US SQ (Special Liquidation Index) calculation. When the CPI was used as an excuse to sell the stocks, it appears that a temporary drop in supply and demand, such as throwing options, led to the sharp decline.
On the other hand, the dollar is strong against the Yen. If the dollar/yen exchange rate stabilizes at the 140 yen level, it will be a significant factor in boosting profits for domestic export companies. The government is trying to speed up the full resumption of inbound tourism, which will also benefit from the yen’s depreciation. The Nikkei Stock Average is also in good shape with the 75-day line above the 200-day moving average line. In the near future, the 200-day line that passes through the 27,400 yen level is likely to bottom.
At the US Federal Open Market Committee (FOMC) meeting in September, if the members’ policy interest rate forecasts shown at this time move up, stock prices will be negative, so caution is needed. However, it is difficult to assume that the pace of interest rate rises will accelerate even further, given that there is no major change in the underlying trend. Once the event is passed, the market will exit and the stock price may rise.
