[Present state recognition of fundamental]
In the US market last week, the stock
market index fell due to fears of a US-China conflict over the closure of the
Consulate General. 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 0.15 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 25.5 and the expected P/E of 17.9
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 0.15%
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 22150 yen, the Japanese market is overvalued by 600
yen in the medium to long term , which is roughly balanced.
[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, FOMC
and Fed Chairman Jerome Powell meet, preliminary GDP figures for April-June. It
will be interesting to see if NYDow can keep above the 25-day line.
②
As a result of the announcement
of the quarterly financial results, the forecasted ROE of the Nikkei 225 stocks
was 6.0%. 0.7 points worse than 3 months ago. Profit growth was -1.7%, an
improvement of 17.7 percentage points compared to three months ago.
③
Although U.S. long-term
interest rates fell and the interest rate gap between Japan and the U.S.
narrowed from 0.63% to 0.59%, the exchange rate, yen was stronger in the 107s
to 105s.
④
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.
⑤
The 2nd week of July was a over
buying. There was a high possibility that the 3rd and 4th week of July ware over
buying, and this week we are forecasting to over selling.
last week, ① was a bearish factor. 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 11.7
points (about 2660 yen when considering the Nikkei225 average) over the medium
and long term. It is less undervalued than last week. On the other hand, the
difference in the rate of deviation from the 200-day line with NYDow is 2.9
points higher (about 660 yen when considering the Nikkei 225) over the medium
to long term.
The Nikkei 225 is above the clouds in the
Ichimoku Kinko table. The overall divergence rate was +11.9%, which is a
smaller range compared to last week. The 200-day moving average deviation rate
was +3.7, widening the positive range. As the three factors are positive, the
"green light" is lit in the medium term trend. The Nikkei average is abave
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 above the 200
and 25 day lines, but below the 9 day line. It is above the clouds in the
Ichimoku Kinko table. Nasdaq is above the 200 and 25 day lines, but below the 9
day line. It is above the clouds in the Ichimoku Kinko table.
In the short term, the "yellow
light" is lit, and in the medium term, the "green light" 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 upward 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.
Analyzing the foreign exchange market last
week, the US long-term interest rates fell, the gap between the Japanese and US
long-term interest rates narrowed, and the exchange rate moved in the direction
of a stronger yen. This week we can expect the yen to be in the range of 106 to
105 yen.
From now on, we need to pay attention to
technical indicators, US market trends, exchange rate movements, and foreign
investor trends.
Last week, the Nikkei 225 moved within the
expected range. The upper price was 40 yen below the assumed range and the
lower price was 100 yen above the assumed range. This week's Nikkei 225 is
expected to move between the Bollinger Band +1σ (now around 22750 yen) and the
Bollinger Band -1σ (now around 22270 yen).
