With the U.S. midterm elections, employment report and Apple earnings ahead, the Nikkei 225 is expected to trade this week with three turning points in focus. External factors including the Bank of Japan's decision to keep rates unchanged and its change in ETF-selling policy, higher oil prices and South Korean export trends will also come into play as major earnings releases overlap with key events.
The U.S. midterm elections are scheduled for the 3rd this week, and the Tokyo market will focus on developments from Wednesday onward following the results released during Japanese hours. In Japan, earnings from Toyota, Nintendo and Sony are due, followed by earnings releases from U.S. companies including Apple, AMD and Qualcomm. With the release times for the U.S. midterm election results and the employment report overlapping, the confirmed factors indicating the direction of share prices are considered limited, increasing the importance of monitoring the price ranges that could serve as turning points.
At its policy meeting on 30 October, the BOJ announced that it would keep its policy rate at 1.25% while increasing ETF sales on a book-value basis. This has prompted views that movements in the yen, interest rates and the ETF market will affect Japanese stocks. The impact of higher oil prices and developments in U.S. semiconductor stocks are also factors to bear in mind.
In the U.S. market, semiconductor stocks were reported lower, with declines reported for Intel, AMD and NVIDIA. In Japan, attention is focused on valuations and orders for semiconductor equipment and electronic-component stocks, as well as the direction of capital investment. The week's turning points are expected to include movements in the ¥61,000 and ¥65,000 ranges, based on how well cash equities absorb the weaker futures market at the start of the week and on the combination of earnings and economic data.
U.S. and South Korean export trends and oil-price movements are also cited as factors. South Korea's October exports rose sharply, while reconciling declines in U.S. semiconductor stocks with the earnings outlook for domestic companies remains a challenge. This week, the stated policy is to monitor separately the money being spent, the profit that can be recovered, the amount sold and the profit remaining.