富国生命投資顧問株式会社

Report

Japanese Equity Market

Overview in May 2019

Nikkei225TOPIX

The stock market in May fell 7.45 percent on the Nikkei Stock Average, as uncertainty over the outlook for the global economy increased as a result of the resurgence of the US-China Trade War.

The first deal after the 10-day holiday began with the fall of concerns about the US-China trade war with the imposition of sanctions tariffs on Chinese products announced by President Trump of the United States. Since then there has been no progress in the US-China trade talks, and it has also been suggested that the US imposes tariffs on all Chinese products, causing the stock market to fall further. From the middle of the month onwards, there were positive signs that China stocks rebounded due to China's expectations for economic stimulus measures and that domestic real GDP in the January-March quarter exceeded expectations. However, the view that the US-China trade war is prolonged became dominant, and the risk-off movement spread worldwide. At the end of the month, the stock price fell further, as President Trump showed a policy to impose additional tariffs on Mexico.

By industrial performance, the real estate rose while mining, shipping and steel fell.

Outlook for June 2019

The top price will be heavy as concerns about the slowdown of the world economy on the back of a resurgence of the US-China trade war. On the other hand, the stock market is expected to move in a narrow range, partly due to expectations from the Federal Reserve for monetary easing.

Domestic real GDP (primary preliminary figures) in the January-March quarter was 0.5% YoY (2.1% annual rate conversion), exceeding most expectations. However, net exports, which have made a large positive contribution, are due to a drastic decline in imports due to sluggish domestic demand, and in terms of content, it may be difficult to say recovery. Public investment turned upward due to the effect of the supplementary budget, but exports, personal consumption, and capital investment have all decreased. In addition, the economic judgment in the monthly economic report in May announced by the government was "The economy is recovering moderately, although exports and production remain weak." Although the word 'recovery' is maintained, it has been revised downward from the previous month. Personal consumption has been kept due to the improvement of employment and income environment, while production and capital investment has been reduced due to the slowing of the Chinese economy and other factors. As for the outlook, it is said that a moderate recovery will continue, but as a risk factor, it is added that "more attention is required" on the impact of the trade problem on the global economy.

The company's financial results for the fiscal year ending 2019 show increase sales and decrease profits (Profit for all industries including finance), and the company plan for the fiscal year ending March 2020 will be a modest increase in sales and profits. It was possible to view it as a somewhat cautious plan before the consecutive holidays, but now it is thought that the hurdles for achieving the plan have become higher as the future of the global economy has become unclear due to the resurgence of the trade war.

The stock market, which had risen since the beginning of the year, dropped sharply in May. The future of the US-China trade war remains unclear, and the upper price is considered heavy. However, in addition to the fact that stock prices have already fallen, there are also expectations for the US-China Summit at the G20 Summit held in late June and the monetary easing by the Fed, so a narrow range trend is expected.