The Nikkei Average rose for the first time in 3 weeks last week before losing momentum toward the weekend and showing signs of a decline. This week brings a range of market-moving events, including the US midterm elections and the employment report, putting focus on the downside target and market direction.
The Nikkei Average rebounded for the first time in 3 weeks on a weekly basis last week, but toward the latter half of the week, investors moved to sell on concerns over earnings from companies linked to AI investment and hyperscalers, and the index ultimately ended around the previous week's closing level. Trading closed at ¥63,290, up ¥597 from the previous week. The index briefly rebounded to ¥64,831 on the 29th, but fell again on the 30th, leaving the outlook for this week uncertain.
Underlying this was caution over fund flows surrounding the AI market. Market reactions to earnings from US companies, including Alphabet and Amazon, as well as Intel's sales outlook, weighed on the market. Demand for AI-related stocks remained supported by bullish investors, but financial concerns are capping the upside.
This week marks the start of the November market, with the most important event being the US midterm elections on Tuesday, 3 November. Market reactions may vary depending on the outcome. Attention will also be required on rising geopolitical risks and movements in oil prices and interest rates. With year-end meetings including APEC and the G20 also on the calendar, investors may become more inclined to wait and see. The US employment report for October is due at the weekend, while the ISM business conditions index and earnings from Japanese companies are also expected in succession. Domestically, earnings from major stocks including Toyota Motor and Nintendo are scheduled, and developments in individual company-specific factors are likely to influence the market.
Key factors to watch this week include market developments after the US midterm elections and reactions to corporate earnings, particularly announcements from major US companies including Apple, as well as the release of economic indicators in Japan and the US. These factors may determine the market's direction, and investors will need to watch developments closely.