[Tokyo 11° Reuters]-
The US Consumer Price Index (CPI) fell below market expectations to the 7% level, which led to a rise in US stock prices. Stock prices have been trending down this year due to inflation concerns, but this could be a game changer.
Rice prices are expected to stabilize further in November. The rate of increase is likely to slow, as it increased significantly in the October-December period last year. The US Federal Open Market Committee (FOMC) 0.75% rate hike in December was a lingering view, but the slowdown to 0.5% will almost certainly be the case.
The US Federal Reserve Board (FRB) will become less policy-oriented after the mid-term elections. It is also possible to see that the super hawk stance is at a point where it will loosen. Stock prices should look higher towards the end of the year. Depending on the December FOMC meeting, the Nikkei stock average could approach 30,000 yen.
However, it’s not completely safe. Future share prices can also be affected by the terminal rate (final destination of interest rate increases). There appears to have been some speculation that the US stock market would not have risen significantly the previous day, but there will be announcements of several economic indicators such as the employment statistics and CPI until the December FOMC. Whether the market forecast is correct or not is unpredictable and unstable price movements are expected.
For Japanese companies, the weak dollar / strong yen can be an obstacle to improving corporate performance. From a perspective of securing a rise in profits over this period, the yen’s appreciation to around 130 yen will be within the allowable range, but there will be less room for an upside. Japanese equities have been solid so far, so even when US equities rise, the pace of their rally could be relatively gradual.
