[Present state recognition of fundamental]
In the US market last week, the stock
market index fell due to the alarm of re-expansion of the new coronavirus
infection. On the other hand, in the medium to long term, the spread of new
types of pneumonia, an inward political situation centered on the world's own
country, a lack of creditworthiness and credit crunch of banks, a slowdown in
China and other economies, a fear of a slowdown in the global economy due to
trade wars, etc. The geopolitical risks of the Middle East, the Korean
Peninsula and Ukraine need continued attention.
The difference in the yield spread between
the Japanese and U.S. markets is the published OECD real GDP forecast for 2021
The Japanese market is overvalued by 0.30 points, considering the announced
OECD real GDP forecast for 2021. The reason for the overvaluation is the
difference between the P/E of the S&P500 at 25.0 and the expected P/E of 18.3
of the Nikkei 225 stocks for the current fiscal year, as well as the difference
between Japanese and U.S. interest rates and GDP growth.
This means that if the difference in the
GDP growth rate between Japan and the U.S. in 2021 is further decrease by 0.30%
compared to the OECD forecast (Japan is revised downward or the U.S. is revised
upward), or if the PER of the Nikkei 225 stocks for the current term is around 17.4,
or if the Nikkei 225 is around 21320 yen, the Japanese market is overvalued by 1190
yen in the medium to long term.
[Conditions for Nikkei average rise]
In the future, the following assumptions
are necessary for the Nikkei average to rise further.
① Rising US market
② UP of expected profit increase rate for
the current term more than before
③ Expansion of the interest rate
differential between Japan and the US and further depreciation of the yen
④ Upward revision of Japan's 2021 GDP
estimate (now -0.5%) by OECD
⑤ Foreign investors over-buying
Looking at recent movements
①
Last week's NYDow weekly trend
was negative. The daily footstep is under the 200-day line and above the clouds
of the Ichimoku kinko table, while the weekly NASDAQ weekly trend was negative.
The daily footstep is above the 200-day line and above the clouds of the
Ichimoku kinko table. This week, all eyes will be on the housing index, the
quarterly earnings release, ISM manufacturing index for June and employment
figures for June. I would like to pay attention to whether NYDow can keep above
the 25th day line.
②
As a result of the announcement
of the quarterly financial results, the forecasted ROE of the Nikkei 225 stocks
was 5.9%. 1.7 points worse than 3 months ago. Profit growth was -3.4%, an
improvement of 5.2 percentage points compared to three months ago.
④
The U.S. long-term interest
rate declined, and the gap between the Japanese and U.S. interest rates
narrowed from 0.69% to 0.64%. The yen was weakening in the range of 106 to 107
yen.
⑤
The OECD's real GDP growth
forecasts for Japan and the U.S. for 2021 were released, and Japan's GDP growth
rate is expected to be -.0.5%. The U.S. market is expected to be up 1.9%, which
means that the Japanese market is 2.4 points worse off in this respect.
⑥
The 3rd week of Jun is a over selling.
There is a high possibility that the 4th week of Jun is a over selling, and
this week we are forecasting to over selling.
last week, ① was bearish factors. It seems that ①,②,③,⑤④ will be affected this week.
[Technical viewpoint]
From a technical perspective on the
Japanese market, the difference in the 200-day deviation rate from NASDAQ is 8.6
points (about 1940 yen when considering the Nikkei 225 average) over the medium
to long term. Compared to last week, the price range has decreased.
The Nikkei is above the clouds of the
Ichimoku Kinko table. The overall deviation rate was +15.3%, a positive margin shrank
from the previous week. The 200-day moving average deviation rate was +3.1%, a
positive margin shrank from the previous week. As the three factors are positive,
the mid-term trend is lit with a "green signal". The Nikkei average
is above the 25_day moving average line and the 9_day moving average line,
"green signal " is lit for short-term trends.
In the US market NY Dow is under the 200_day
line and the 25_day line and the 9_day line. It is above the cloud of ichimoku
table. NASDAQ is above the 200_day average line and the 25_day average line but
under the 9_day average line. It is above the cloud of the ichimoku table. In
the short term "yellow signal" is lit and in the medium term "yellow
signal" is lit.
[Outlook for this week]
Looking at the US market fundamentally,
concerns such as interest rate hikes in the United States, US-China trade
friction, US political uncertainty, North Korea issues are receding However, Spread
of pneumonia infection by new coronavirus, falling crude oil prices, worsening
U.S. corporate earnings, falling high yield bond markets , global long-term
interest rate decline trend, financial market turmoil caused by credit slumps, lack
of creditworthiness and political situation of EU banks, global economic
slowdown concern with trade war, geopolitical risk of the Middle East and
Ukraine Etc exist as a risk factor.
Real estate prices in China are flat in
large cities, but the problems of nonperforming loans in China as a whole such
as excessive facilities have not been resolved. If you hurry up the process, it
will lead to a short-term market drop, and if you delay proceeding, there is
concern that the economic recession will be prolonged.
In addition, although the LIBOR interest
rate has recently been declining, in March, the LIBOR interest rate has risen
despite a decline in short-term interest rates, so there is a concern that
financial instability may recur.
On the other hand, good news is the US zero
interest rate policy, the Fed's direct financial support to companies including
the purchase of junk bonds, economic measures of $ 2 trillion, and President
Trump's policy expectations, monetary easing measures such as the Bank of
Japan's 2% inflation target, the introduction of negative interest rates and
the purchase of unlimited Japanese government bonds and 12 trillion yen in
ETFs, as well as expectations for economic measures by the Japanese government
that exceed the level of the Lehman Shock, large-scale economic measures by the
EU countries, and the ECB's announcement of deepening negative interest rates
and expanding quantitative easing.
Looking at the technical aspect, the US
market is no trend in the medium term, and no trend in the short term. The
Japanese market is upward trend in the medium term, and upward trend in the
short term.
An analysis of the foreign exchange market
last week shows that although long-term U.S. interest rates fell and the gap
between the U.S. and Japanese long-term interest rates narrowed, the The yen
has moved in a weaker direction. This week is expected to be in the 106 to 107
yen range.
From now on, we need to pay attention to
technical indicators, US market trends, exchange rate movements, and foreign
investor trends.
The Nikkei average for last week remained
within the expected range. The upper price fell about 190 yen below the assumed
line, and the lower price exceeded the assumed line by about 630 yen. The
expected range for the Nikkei 225 this week is to move between the Bollinger
Bands +1σ (currently around 22880 yen) and the Bollinger Bands-1σ (currently
around 21730 yen).
