*Information compiled as of 23:18 JST on October 2. Japanese stock data uses the final closing price on October 2, US stock data uses the closing price on October 1 and the opening price on October 2, and crude oil data uses reports as of 23:09 JST on October 2. The Friday closing prices for the US market and the final weekly performance are not yet confirmed.
Looking only at the final day, this week’s market was one where it was easy to get the wrong impression.
The Nikkei 225 fell 647 yen on Friday. However, it rose by approximately 1,945 yen over the course of the week. Meanwhile, the Dow was down from the previous weekend based on data through Thursday.
Japanese and US stocks did not move in the same direction.
We will look back at the Nikkei 225, the Dow, crude oil, and the global situation that moved the market in order.
Nikkei 225: Fell early in the week, rebounded significantly in the latter half
The weekly closing prices for the Nikkei 225 were as follows. [1][2]
● Monday, September 28: 65,877.62 yen. Down 486.58 yen from the previous business day.
● Tuesday, September 29: 65,481.27 yen. Down 396.35 yen from the previous business day.
● Wednesday, September 30: 66,753.72 yen. Up 1,272.45 yen from the previous business day.
● Thursday, October 1: 68,956.72 yen. Up 2,203.00 yen from the previous business day.
● Friday, October 2: 68,309.46 yen. Down 647.26 yen from the previous business day.
The closing price on the previous weekend, September 25, was 66,364.20 yen. Calculating from this, it is a weekly gain of 1,945.26 yen, an increase of approximately 2.93%. [3/Weekly change calculated by the author]
Since the 29th was also affected by dividend ex-rights, one must be careful not to interpret the entire decline that day as a deterioration in investor sentiment. [4]
What stood out this week was the sharp rise on Thursday. Following Micron’s earnings report in the US, expectations for AI and semiconductors spread to related Japanese stocks. [5]
However, just because the Nikkei 225 rose significantly does not mean that Japanese stocks as a whole rose in the same way.
On October 1, the number of advancing issues on the Tokyo Stock Exchange Prime Market was 750, while 747 issues declined, making them almost evenly matched. By industry, there were 11 gaining sectors against 22 declining sectors. [5]
The rise in the index did not match the rise in one’s own holdings. I think it was a market where that feeling was easy to have.
On Friday, the market fell back due to profit-taking following the significant gains made until then. [2]
It fell on Friday. Even so, it rose for the week.
By looking at these two things separately, it becomes easier to organize the movement of Japanese stocks this week.
Dow: Negative compared to the previous weekend through Thursday
The Dow’s closing price on October 1 was 50,926.56 dollars. Compared to the closing price of 51,828.62 dollars on September 25, it was a decline of 902.06 dollars, or approximately 1.74%, through Thursday. [6][7/Rate of change calculated by the author]
This is not the final weekly performance including Friday.
On Monday the 28th, the Dow fell 0.67% as high crude oil prices and rising US Treasury yields became a burden. Uncertainty surrounding peace negotiations between the US and Iran was also a factor. [8]
Even if expectations for semiconductors were strong in Japanese stocks, caution regarding energy prices and interest rates remained in the US market as a whole.
On October 1, the US 10-year Treasury yield rose to 5.34% at one point before falling, and the Dow also ended with a slight gain. [7]
Then, on October 2, following an employment report that fell below market expectations, caution regarding additional interest rate hikes receded. Supported by lower crude oil prices, the Dow opened at 51,266.64 dollars, up 340.08 dollars. [9]
US stocks are in the middle of Friday’s trading. Whether this rebound will continue until the closing bell is unknown at this time.
Crude oil: From a sharp rise on Thursday to a decline on Friday
Crude oil moved significantly this week between anxiety over supply and expectations for policies to alleviate it.
The settlement price on October 1 was 102.31 dollars per barrel for Brent crude futures and 92.87 dollars for WTI crude futures. Compared to the previous day, this was an increase of 4.37% and 2.71%, respectively. [10]
Reports of additional US troop deployments to the Middle East and China’s ban on the export of petroleum products intensified supply concerns. [10]
However, the following day, the 2nd, prices fell following reports that the release of diesel and crude oil reserves was being discussed in Europe.
As of 23:09 JST, Brent was at 99.25 dollars and WTI was at 88.92 dollars. Both were trending downward from the previous weekend at that time. [11]
Friday’s figures are not settlement prices. Also, since Brent is in a period where the front-month contract is switching, one must be careful about simply connecting prices from different contract months. [10]
What I feel from this movement is that it is still too early to say that crude oil prices will rise steadily or that the supply problem has been solved.
Even if prices fall due to expectations of a reserve release, it is necessary to confirm separately whether that means a sustainable recovery of the supply chain.
Global affairs: In addition to the Middle East, ‘where to procure fuel’ is the focus
The global affairs that directly affected the market this week can be organized into two main points.
The first is the negotiations between the US and Iran.
At the beginning of the week, crude oil rose on reports that the US had rejected Iran’s peace proposal. After that, price movements fluctuated due to expectations of talks through intermediary countries. [8]
The second is the response of various countries regarding fuel supply.
China’s ban on petroleum product exports and discussions on reserve releases in Europe became factors in the crude oil and fuel markets. [10][11]
Here, it is also important to distinguish between crude oil and petroleum products such as diesel.
Even if crude oil reaches the market, if there is a lack of capacity to refine it and deliver it to where it is needed, the fuel supply problem remains. In this report as well, the damage to refining capacity in the Middle East and Russia is cited as a background factor. [10][11]
When looking at global news, it is easier to understand the connection to the market if you look not only at whether ‘negotiations are progressing’ or ‘military tensions are rising,’ but also at how it actually affects energy supply.
Things I want to check again next week
From here on is my perspective based on the facts of this week. It is not a prediction of price movements.
First, where US stocks end on Friday.
I want to check the final closing prices of the Dow and major indices rather than evaluating the week based solely on the opening rebound.
Next, crude oil prices and US Treasury yields.
If crude oil settles down, there is a possibility that caution regarding inflation will ease. However, the meaning for the stock market changes depending on whether the reason for the price drop is supply recovery or anxiety over demand.
And, how far the rise in Japanese stocks will spread.
Will the market continue to be driven by a few stocks such as semiconductors? Or will buying spread to the TOPIX and a wider range of industries? I want to look at the Nikkei 225 figures and the content of the overall market together.
This week, the weekly rise of the Nikkei 225 and the unstable movements of US stocks and crude oil occurred at the same time.
It was a week that made me feel the importance of not judging the entire market by the ups and downs of a single day, and of checking stock prices, crude oil, interest rates, and the timing of news together.
*This article is a market review and personal opinion. It does not recommend the buying or selling of specific products. Please check the product details and your own financial situation, and make investment decisions based on your own judgment and responsibility.
Reference Materials
[1] IwaiCosmo Securities Market Commentary (September 29, including back issues)
[2] Kyodo News / OANDA“Tokyo stocks fall back, closing down 647 yen” (October 2)
[3] Nikkei 225 Profile Daily Summary (September 25)
[4] Kabutan “Market Daily Report” (September 29, Yahoo! Finance)
[5] IwaiCosmo Securities Market Commentary (October 1)
[6] Reuters US Stock Closing Prices (September 25)
[7] Reuters US Stocks and Bond Market (October 1)
[8] Reuters US stocks fall on higher oil prices and rising interest rates (September 28)
[9] Reuters US Stock Market Opening (October 2)
[10] Reuters Oil prices rise following China’s suspension of petroleum product exports (October 1)
[11] Reuters Oil prices fall following discussions on reserve releases (October 2)
