Where Will Stocks Go After Silver Week? Outlook Based on US and Japanese Events (Toshiru)

This week, the US FOMC decided on further monetary tightening and released a dot plot that included the possibility of keeping policy rates unchanged. While expectations for one more rate hike in 2026 remain strong among market participants, volatility in US stocks remains possible depending on developments in long-term interest rates. AI-related stocks entered a correction phase under the high-interest-rate environment, while non-AI stocks, including security-related stocks, stood out for their relative firmness.

The Bank of Japan implemented an additional 0.25% rate hike at its Monetary Policy Meeting. The interest-rate differential between Japan and the United States temporarily created periods of yen depreciation and appreciation, but the expected easing of the yen appreciation trend is likely to provide a tailwind for Japanese stocks. With the Japanese market set to reopen next week, developments in crude oil prices and the outcome of the US-China summit could determine the overall direction of the stock market.

Crude oil prices are among the key factors to watch next week, with WTI continuing to trade around the $100 level. Depending on expectations for rate hikes in Japan and the United States and movements in crude oil prices, these factors could also support a rebound in US stocks. Meanwhile, after the Japanese market was closed during Silver Week, the market’s resilience and developments in AI-related stocks are expected to return to the market’s focus.

By market, risk assessment of AI-related stocks continued in the US market, while there were periods of buying in non-AI stocks in Japan. By sector, services, marine transportation and pharmaceuticals rose relatively strongly. AI stocks are expected to continue experiencing alternating sharp declines and surges next week, while BOJ policy developments and movements in the Japan-US interest-rate differential are likely to affect the market as a whole.