Next week, the results of the U.S. midterm elections, the release of U.S. employment data, and the acceleration of domestic earnings announcements will be the market’s focus. Following the decline in U.S. stocks the previous week, attention will be on AI-related stocks and the market’s reaction.
U.S. stocks fell sharply the previous week. The Dow closed at $51,770.31, down $572.25 from the previous day, while the Nasdaq ended at 25,437.00, down 747.73 points. Declines in Intel and Amazon, whose earnings fell short of market expectations, weighed on the market and heightened concern over AI-related investment.
The biggest focus next week will be the U.S. midterm elections. If the Republican Party retains majorities in both the Senate and the House of Representatives, the result may be viewed as a short-term positive for stocks, although some expect the risk of a renewed rise in long-term interest rates to increase. If the Democratic Party wins a majority, some expect calls to curb AI development to resurface. Immediately after the midterm elections, developments in Iran will also require monitoring.
Among overseas companies reporting earnings, Samsung Electronics, Intel, Alphabet and Amazon were evaluated as falling short of market expectations, warranting caution regarding related stocks going forward. AMD, Arm and Qualcomm are scheduled to report earnings next week. Domestic companies’ July-September earnings are expected to show a lower positive-surprise ratio than previously, with more non-AI companies scheduled to report. Major trading companies will concentrate their earnings announcements in the first half of the week. Toyota Motor, Nintendo, Nippon Steel and Kao are scheduled to report on the 5th, followed by Mitsubishi Heavy Industries and Mitsui Fudosan on the 6th.
This week, the FOMC, the Bank of Japan’s Monetary Policy Meeting and the ECB Governing Council all announced that policy would remain unchanged. The Bank of Japan decided to accelerate the pace of its ETF sales, which may heighten caution during market declines. U.S. employment data are scheduled to be released next week, although many expect the impact immediately after the midterm elections to be limited. Attention will also remain focused on the euro’s decline and the dollar’s rise following the ECB’s decision to forgo a rate hike, as well as on the Bank of Japan’s interest-rate outlook.