In the September market, as many companies are reporting generally strong earnings, investors may begin to focus on a shift in funds toward domestic-demand stocks. Attention will center on the allocation of funds from externally focused stocks to domestic-demand sectors that still appear undervalued. Important events scheduled for September include the BOJ meeting, a cabinet reshuffle, and debate over consumption tax cuts in the extraordinary Diet session.
Summer earnings results were generally solid, and there is growing speculation that ordinary profit in fiscal 2026 could increase by more than 20% year on year. Although the market is expected to continue testing the upside, some observers have pointed to the possibility of a change in market leadership.
External-demand stocks, including AI and semiconductor-related names, and the financial sector, which have driven share prices to date, are expected to remain important. However, there have been periods when valuations appeared stretched, raising the possibility of a shift in funds toward domestic-demand stocks. Food Products and Services in particular are seen as retaining valuation appeal despite reporting solid earnings.
Important events are scheduled in Japan and overseas in September. Attention will focus on the BOJ monetary policy meeting, a cabinet reshuffle under the Takaichi administration, and the outcome of debate over consumption tax cuts at the autumn extraordinary Diet session. If upward pressure on interest rates strengthens against a backdrop of macroeconomic factors, a short-term market correction may occur.
As part of their market strategy, investors are reportedly considering increasing the weighting of domestic-demand stocks alongside portfolios centered on external-demand stocks. This is viewed as including a reallocation aimed at long-term returns, underpinned by the stability and growth potential of domestic demand.