The yen strengthened on the day, with USD/JPY trading in the ¥153 range. Japanese stocks diverged by name, with automotive stocks facing a headwind while funds flowed into stocks more likely to benefit from yen appreciation.
The yen’s appreciation level influenced market-wide trading, and USD/JPY’s move into the ¥153 range led to wider divergences among Japanese stocks. Market participants appear to have selected stocks based on company-specific earnings factors and foreign-exchange sensitivity while focusing on the yen’s appreciation phase.
Automotive stocks came under relative pressure from the stronger yen, while some investment funds flowed into other sectors. Meanwhile, stocks considered more likely to benefit from yen appreciation continued to attract funds.
The market is expected to continue selecting stocks based on the durability of the yen’s appreciation phase and each company’s foreign-exchange sensitivity. Developments in stocks of interest and the allocation of funds between sectors are therefore expected to remain difficult to predict.