The Tokyo stock market on May 18 is expected to open higher with the Nikkei Stock Average starting with buying interest, but upside is likely to be limited. While bargain hunting is anticipated today following the sharp drop of over 1,200 yen in the closing price last Friday, trading is expected to remain around the 61,000 yen level. In European stock markets last Friday, major indices were forced into deep losses, led by Germany's DAX which fell 2%. The situation in Iran continues to show no progress in negotiations toward ending hostilities, and the surge in crude oil prices is dampening investor sentiment. In the U.S. stock market, both the Dow Jones Industrial Average and the Nasdaq Composite Index fell by more than 1%, with selling pressure for profit-taking emerging in the technology sector, particularly semiconductor-related stocks, weighing down the overall market. The Philadelphia Semiconductor Index (SOX Index) declined by 4% at the close of trading. As WTI crude oil futures prices surged to $105 per barrel at the close, inflation concerns resurfaced, further accelerating the rise in U.S. long-term interest rates and dampening sentiment. Warsh, who was selected as the new Fed chairman, advocates for balance sheet reduction, which the market is also wary of. With the upward trend in long-term interest rates becoming clear globally, the relative overvaluation of stocks is being increasingly recognized due to expectations of higher interest rates ahead. The Tokyo market cannot help but be sensitive to domestic interest rate movements as well. Last Friday, the yield on newly issued 10-year government bonds broke into the 2.7% range, reaching the highest level in approximately 29 years. With the earnings announcement of NVIDIA scheduled for the 20th this week, a wait-and-see mood is likely to emerge.

In the U.S. stock market on the 15th, the Dow Jones Industrial Average fell 537.29 dollars to 49,526.17 dollars from the previous trading day. The Nasdaq Composite Index stood at 20,255.14, down 410.08 points.

On today's schedule, there will be an auction for 5-year government bonds and the investment trust overview for April. Overseas, events include China's new home prices in 70 cities for April, China's fixed asset investment, real estate investment, retail sales, and industrial production for January to April, the G7 Finance Ministers and Central Bank Governors Meeting (through the 19th), and the NAHB Housing Market Index for May.

Source: MINKABU PRESS

*Translated by generative AI. Click here for the original article.