The view was expressed that the decline in US stocks from their record highs would continue, with headwinds expected from the midterm elections, while Japanese stocks were expected to see the Nikkei rise on strength in semiconductor stocks before overseas short-term traders eventually moved in with profit-taking sales.
In early October, the US market remained under pressure from a decline in the NY Dow from its late-September high, amid expectations for long-term interest-rate moves and the release of employment indicators. On 2 October, the market repeatedly rebounded and fell. Technology stocks, led by semiconductor stocks, showed relative strength, but the overall downtrend from record-high levels remained in focus.
Inflationary pressures and the outcome of the midterm elections were cited as factors affecting the outlook for US equities, while oil-price trends and interest-rate expectations were reported as factors driving stock-price volatility. On 2 October, many market participants said they wanted to assess the employment report, and fluctuations in expectations for further rate hikes weighed on market sentiment.
China's markets were closed for the National Day holiday, but the view was expressed that developments in US-China relations and energy markets would spill over into the Japanese market. In Japanese stocks, the Nikkei rose sharply on 1 October, but fell back on 2 October under the impact of higher oil prices and profit-taking sales.
While the upward contribution from AI- and semiconductor-related stocks remained prominent in Japanese equities, it was noted that the market as a whole remained susceptible to moves by overseas short-term traders. The Nikkei increasingly took on the character of a rebound from its June high, while future market direction was expected to be determined by the interplay between overseas buying to cover short positions and selling.