[Summary] (Reading time approximately 5 minutes)
On March 30, 2026, the Tokyo market fell sharply due to the drop in US stocks the previous weekend. Nikkei average futures adjusted to the 51,000 yen level, and the spot Nikkei average continued to fall significantly. The decline was centered on semiconductor-related stocks, which tend to be linked to the decline in U.S. high-tech stocks. On the other hand, although interest margins for bank stocks are expected to improve due to rising interest rates, there remains the risk of valuation of stock holdings due to falling stock prices. At this point, it seems more like a PER adjustment than a credit concern. Prices are likely to remain volatile in the short term, with the Bank of Japan Tankan and U.S. employment statistics pending.
The market cooled down considerably at the beginning of the week.
Japanese stocks on March 30, 2026 have been sold significantly since the beginning of the week.
US stocks fell sharply last weekend. The NY Dow fell to $45,166, and the S&P 500 and NASDAQ also fell.
The correction in tech stocks is not the only factor behind this.
High oil prices. Geopolitical risk. Be wary of US long-term interest rates. Concerns about a resurgence of inflation.
A combination of these factors led to widespread selling across risk assets.
The Japanese market also followed this trend. The Nikkei average fell sharply at one point, and the spot closing price was in the 51,885 yen range. Futures also adjusted to the 51,000 yen level.
This drop is not just a one-day price movement. This move showed how sensitive Japanese stocks, which were in the high range, are to changes in the external environment.
This drop is not due to confidence concerns
The first thing I would like to clarify is that this decline is not due to corporate financial instability.
Japanese companies' balance sheets are still healthy overall. Many companies also have high equity ratios. Many companies also have stable operating cash flow. The nature of this is different from market instability caused by excessive debt.
To put it more simply, this adjustment is a "PER correction."
The stock price is
EPS × PER
It can be considered.
Even if the outlook for EPS, or corporate profits, has not changed significantly, stock prices will fall if the P/E ratio that investors accept falls.
Especially when interest rates are rising, growth stocks that have been bought based on expectations for future profits are more likely to be sold.
A representative example of this is semiconductor/AI related.
Semiconductor stocks have a large impact on the index
The Nikkei average is an index whose value is easily influenced by stocks.
Therefore, when stocks such as Tokyo Electron, Advantest, and SoftBank Group move significantly, the index as a whole tends to fluctuate greatly.
Semiconductor stocks in particular have a high correlation with the US NASDAQ and US semiconductor stocks.
The demand for AI itself has not disappeared. However, strong expectations are already priced into the stock price.
Therefore, when high-tech stocks are sold in the US, profit-taking sales are likely to occur in Japanese semiconductor-related stocks as well.
Tokyo Electron is a leading brand of semiconductor manufacturing equipment. The medium- to long-term theme of business results is strong. However, since it has a large contribution to the index, it is easy to sell if the overall market collapses.
The same goes for Lasertech. While it has a strong growth theme related to EUV, it is also a stock with high expectations. Stocks with high P/E ratios tend to experience a large decline when the market turns risk-off.
Bank stocks are not monolithic
Bank stocks are viewed a little differently than semiconductor stocks.
Rising interest rates will help banks improve their profit margins. In particular, for major banks like Mitsubishi UFJ Financial Group, rising domestic interest rates are likely to lead to higher profit expectations.
However, when the stock market declines significantly, people become conscious of the unrealized gains and losses on their stock holdings.
In other words, bank stocks
Rising interest rates are a plus. Stock prices are negative.
There are two sides to this.
When the overall market is unstable, it is difficult to simply say ``buy bank stocks because interest rates are rising.''
Export stocks are supported by the weak yen, but the economic slowdown is heavy
Export-related stocks will support business performance if the yen continues to weaken.
Automobiles, machinery, electrical equipment, etc. are easily affected by exchange rates. A weaker yen will push up the yen equivalent of overseas sales.
However, the story will change if the global economy slows down.
Even if there are exchange rate benefits, profits will be difficult to grow if sales volume declines. In a situation like the current one, where U.S. stocks are experiencing a major collapse, investors are more likely to be wary of a slowdown in demand than about foreign exchange rates.
The level of the Nikkei average as seen by EPS and PER
Here, the expected EPS of the Nikkei average is set at 2,800 yen.
The levels for each PER are as follows.
| Scenario | PER | Nikkei average guideline |
|---|---|---|
| Bearish | 17x | 47,600 yen |
| Neutral | 18.5x | 51,800 yen |
| Bullish | 20x | 56,000 yen |
The current 51,000 yen level is close to a neutral scenario.
In other words, the current stock price does not reflect a "collapse in performance," but rather appears to have been revised to a somewhat cautious P/E ratio.
However, if US stocks continue to fall, the ratio could be adjusted to 17x.
On the other hand, if the U.S. employment statistics and the Bank of Japan Tankan pass without incident, and U.S. interest rates settle down, there is a possibility that the stock will once again test the 20x target.
6 month outlook
High volatility is likely to continue over the next six months.
There are three focuses.
The first is US interest rates. If interest rates continue to rise, semiconductor and AI-related P/E ratios will likely be suppressed.
The second is corporate performance. It will be important to see to what extent the profit outlook for fiscal 2026 will be maintained in the financial results from April onwards.
The third factor is foreign investors buying Japanese stocks. If expectations for improved capital efficiency and shareholder returns continue, the downside of Japanese stocks will likely be supported.
Over the next six months, we would like to expect the Nikkei average to range from the upper 47,000 yen to around 56,000 yen.
1 year outlook
Looking at it over a one-year period, the important point is whether EPS growth continues.
If EPS rises above 2,800 yen, there is still room for the Nikkei average to rise. On the other hand, if the global economy slows and the profit outlook for export companies and semiconductor-related companies declines, stock prices are likely to undergo further adjustment.
The medium-term theme for Japanese stocks still remains.
Wage increase. Inflation is here to stay. Improving corporate capital efficiency. Buy back own stock. Governance reform.
These are supporting factors for Japanese stocks.
However, in the short term, the US market will have a strong influence. This is not a situation where the stock will continue to rise solely due to positive factors unique to Japan.
Stock price scenario
Bullish Scenario 25%
US interest rates have stabilized and US tech stocks have rebounded. The outlook for Japanese companies' performance is also solid, which is a case for foreign investors to return to buying.
In this case, the Nikkei average may test towards 56,000 yen.
Neutral Scenario 50%
This is a case where U.S. stocks are unstable but do not collapse, and Japanese companies' performance does not deteriorate significantly.
The PER ratio remains in the 18x range, and the Nikkei average moves around the 51,000 to 53,000 yen range.
Bearish Scenario 25%
A case in which U.S. stock prices continue to decline due to a combination of rising U.S. interest rates, high oil prices, and geopolitical risks.
Selling continues, centered on semiconductor stocks, and the Nikkei average may adjust to the 47,000 yen level.
Risk factors
Prolonged US stock adjustment
If US stocks, especially the Nasdaq, continue to fall, the selling will likely spread to Japanese semiconductor stocks as well. The Nikkei Stock Average is heavily influenced by low-value stocks, which puts downward pressure on the index as a whole.
Rise in US long-term interest rates
A rise in interest rates will lead to a fall in the P/E ratio. This will be a headwind, especially for high-growth stocks and AI-related stocks.
Crude oil prices and rekindled inflation
If oil prices continue to rise, corporate costs will rise. Consumer sentiment is also likely to be adversely affected. As a result, it will weigh on domestic demand stocks as well.
Deterioration of domestic business confidence
If a deterioration in business sentiment is confirmed in the Bank of Japan Tankan, etc., the profit outlook for Japanese stocks as a whole is likely to be revised downward.
Summary
It is natural to view the recent decline in the Nikkei 225 average as a valuation adjustment in response to the external environment, rather than as a result of confidence concerns.
Semiconductor stocks are strongly affected by the decline in US high-tech stocks. While bank stocks have the benefit of rising interest rates, they also come with the risk of falling stock prices. Export stocks are supported by the weak yen, but caution is needed regarding the slowdown in the global economy.
The current price of 51,000 yen is close to the neutral range of expected EPS of 2,800 yen and PER of 18 times.
What matters here are US interest rates and corporate performance. If interest rates settle down and earnings expectations are maintained, there is room for the stock to test its upside again. On the other hand, if the U.S. stock market continues to fall, we would like to anticipate a correction to the 47,000 yen level.
Don't be too optimistic in the short term. However, this does not mean that the structural investment theme for Japanese stocks has collapsed.
Now, rather than being all bullish, we are at a point where we are looking at each scenario calmly.