In October, the initial uptrend was driven by Prime Minister Ishiba’s intention to continue the previous administration’s policies, reducing economic policy uncertainty, and strong US employment statistics leading to higher US interest rates and a weaker yen. In the second half, concerns over domestic political instability caused a temporary decline, but the market rebounded as the ruling party avoided a regime change through partial cooperation with opposition parties.
The Japanese equity market has been range-bound (38,000 – 40,000 in terms of the Nikkei 225 index) after achieving a sharp rebound after the turbulence in early August and lagged behind the US market. However, positive factors supporting the market remain intact, including a shift away from deflation, corporate reform, an emerging equity culture, and attractive valuations compared to the US.
After the results of the general election, the ruling coalition seeks cooperation from the Democratic Party For the People (DPFP), and it could have positive implications on the economy.
Corporate earnings outlooks remain conservative, but progress toward guidance is not as bad as media reports suggest.
It is important to consider the impact of Trump’s policies and examine individual companies.
Full article: pdf Market Outlook October 2024
Written by Kazuhiko Hosaka, Senior Product Specialist, Asset Management One Co., Ltd.