Pulishi: Japanese stocks were oversold earlier, and the yen's trend depends on US inflation, interest rates, and the Fed's policy
Portfolio expert Daniel Hurley from PLSH Global Stock pointed out that the early excessive selling in the Japanese stock market provided investors with buying opportunities, especially in sectors less affected by the US economy. In the future, attention will be paid to Japan's inflation and wage data to assess the economic situation. The trend of the Japanese yen is influenced by US inflation, interest rates, and Federal Reserve policies, while the third-quarter performance of Chinese and American companies will be the focus of investors
According to the Zhītōng Finance APP, Daniel Hurley, an expert in global stock portfolio at Polaris Capital, pointed out that the Japanese stock market was oversold earlier, but there are opportunities for investors to selectively increase their holdings in the Japanese stock market, especially in stocks that are less affected by the strength of the U.S. economy and the Japanese yen. Looking ahead, in Japan, close attention should be paid to inflation, especially wage inflation data, as the Bank of Japan considers it a key factor in the economy moving away from 30 years of deflation. Local GDP growth and more extensive consumption data remain relatively healthy. A stronger yen will lower the costs of food and energy imports, which is expected to further alleviate pressure on domestic consumers.
Polaris stated that from a global economic perspective, key factors affecting the outlook for the Japanese yen will be U.S. inflation, interest rates, and Federal Reserve policy. The Jackson Hole Global Central Bank Annual Meeting will be held at the end of August, during which the Federal Reserve will deliver speeches, with their remarks possibly reflecting their latest policy stance ahead of the September interest rate meeting.
Earlier, the Japanese stock market gave back its gains from 2024, falling by 24% in just 3 weeks. Japanese bank stocks plummeted by 20% in two days, largely due to market expectations of a decrease in U.S. interest rates. The main reason for the market weakness was the U.S. CPI (Consumer Price Index) inflation data for July, which seemed to trigger an overly strong market reaction. Additionally, U.S. GDP (Gross Domestic Product) growth data exceeded expectations.
Polaris stated that from a microeconomic and stock perspective, starting from the end of October, investors will focus on the third-quarter performance of Japanese and U.S. companies. In Japan, investors will focus on healthy profit growth, as well as the continuous improvement of corporate governance and shareholder returns. In the U.S., the focus will be on the resilience of U.S. and global consumers, the progress of artificial intelligence infrastructure development, and the significant investments by companies in artificial intelligence driving return enhancements