Photographed in front of the stock price board in Tokyo on March 31st. REUTERS/Manami Yamada
TOKYO, May 5 (Reuters) – On the morning of the 5th, the Nikkei Stock Average on the Tokyo stock market was led by selling, fed up with the drop in stocks in the U.S. market. At one point, it fell below the milestone of 50,000 yen.
We asked market participants for their views.
◎Sales centered on AI-related products, wary of overpriced feeling Within the range of daily adjustment
The drop in stocks was likely triggered by reports that the CEO of a major US financial company had warned that the stock market could be heading into a correction phase. Investors were looking for a place to sell as the market as a whole was conscious of being overvalued. Profit-taking selling is spreading mainly in AI (artificial intelligence) and semiconductor-related products, which have been rising at a rapid pace.
On the other hand, there is no change in the economic environment, and it is likely within the range of daily adjustment. There may be another decline, but I think it will settle down in the short term. Other Asian stocks are also weak, which does not mean that expectations for the Sanae Takaichi administration have waned.
◎ Get rid of the feeling of overheating and gradually buy at the top of the market
Today’s decline is a healthy adjustment that dispels the feeling of overheating, and there is no need to be overly cautious. Yesterday’s Tokyo stock market saw strong selling towards its close and closed at a low price, and profit-taking has been taking place since early morning today. Both Japan and the US had hit record highs, so it is inevitable that there will be an adjustment.
A fall of more than 1,000 yen may seem like a significant drop, but it can’t be helped that the range of adjustment will be that much larger, especially since the rate of increase has been rapid so far. As of now, the Nikkei average has not moved below 50,000 yen, so I think it will gradually become easier to buy on the dip.
◎The decline in US tech stocks supports bearish sentiment, and people are wary of continued decline in US stocks
Although there was originally a sense of caution over high prices, the bearish view was reinforced by the decline in US tech stocks. In the U.S. market, there are cases in which stocks fall even when financial results are not bad, suggesting that there is a sense of caution about overheating.
Stocks that are believed to be related to the Sanae Takaichi administration’s policies are also under pressure from profit-taking. Rather than a decline in policy expectations, it is likely that the market is unfavorable and sentiment is deteriorating, so they are trying to sell while they still have profits.
For now, I think it’s within the range of speed adjustment. However, US stock futures in after-hours trading are falling, and if US stocks continue to fall this evening, the correction in Japanese stocks may continue.
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