The Nikkei 225 suffered a sharp decline in October amid a battle over the ¥70,000 level. Attention is now focused on the subsequent recovery phase and rotation into individual stocks.
The Nikkei 225 rebounded from its September low, but was capped at ¥70,798 on 6 October and fell again. On 15 October, it recorded a ¥3,318 single-day decline, the third-largest sharp fall on record, fueling the view that it will take time to update its record high.
In response to the Nikkei 225's movement, the decline in the TOPIX was analyzed as being less severe, and TOPIX-oriented stocks were identified as likely to remain the mainstay for the time being. Looking ahead, the market is expected to focus on the success or failure of the Takaichi administration's growth-oriented fiscal policy.
Regarding the future direction of stock prices, the timing of a recovery from the decline of more than ¥3,300 on 15 October was identified as key. A short-term recovery would support expectations of further gains, while a prolonged recovery would warrant caution. As funds shift toward overseas markets, it was explained that whether Japan's economic growth outpaces that of other countries will determine the direction of the return flow of funds.
Defense, shipbuilding and real estate stocks are attracting attention as near-term areas of interest. Specific views cited Mitsubishi Heavy Industries, Mitsui Fudosan and Nintendo as stocks whose price movements warrant attention.