After Golden Week, the Japanese stock market is neutral, focusing on exchange rates and consumption

[Summary]

The Japanese stock market is "neutral" after Golden Week. While the Nikkei average briefly reached the 60,000 yen level in April, profit taking, the yen exchange rate, high crude oil prices, and weak consumption are likely to keep the top price down. Overseas, AI-related demand is supporting demand, but the situation in the Middle East and US interest rates are risks. In the short term, if the yen weakens, export stocks will receive a tailwind, while if the yen strengthens, it will likely give domestic demand and defensive advantages an advantage.

Overview

The end of Golden Week is a time for Japanese stocks to test their ability to continue their upward trend.

The Nikkei average rose to 60,013 yen at one point on April 23rd, but then fell to the 59,140 yen level as profits were taken. The background factors are expectations for AI-related stocks, corporate performance, and the weaker yen.

On the other hand, expectations for foreign exchange intervention, high crude oil prices, and weakness in consumption are weighing on the economy.

Financial Results/Market Highlights

Indicators	Contents
Nikkei average	Temporarily in the 60,000 yen range in April
Stock themes	AI, semiconductors, corporate reform
Foreign exchange	After the yen depreciation, fluctuations due to intervention speculation
Consumption	Household expenditure in February was down 1.8% from the previous year in real terms
Employment	March unemployment rate 2.7%, job openings ratio 1.18 times

What happened

Quantity

Overseas investors' purchases of Japanese stocks are on a recovery trend.

In early April, overseas investors made large net purchases of Japanese stocks. The return of funds to Japanese stocks is supporting the market.

It's a structural factor.

Price

While a weak yen tends to boost the profitability of exporting companies, it also puts pressure on household budgets through import costs.

At the end of April, the yen temporarily fell to the 160 yen level, and there were reports of currency intervention by the Japanese authorities.

Both temporal and structural factors.

Cost

High oil prices and the situation in the Middle East are pushing up corporate costs.

The Bank of Japan assumes a relatively high price outlook for fiscal 2026 due to high crude oil prices and price pass-through.

This is a cost factor close to structural change.

Exchange

During Golden Week, there were few market participants and the environment was prone to currency fluctuations.

As speculation remains that the Japanese authorities will intervene, it is likely that after Golden Week, there will be a stronger selection between stocks that benefit from a weak yen and stocks that benefit from a strong yen.

Latest materials 3 months

Material	Implications for stock price
Nikkei average approaches 60,000 yen	It is easy to feel a sense of accomplishment and lock in profits
Rising AI-related stocks	Support materials for semiconductors and electronic components
Continued depreciation of the yen	Tailwind for export stocks, burden on domestic demand
Foreign exchange intervention observation	Short-term volatility increase
Slowdown in consumption	Cautious factors for retail, restaurant, and service stocks
Decline in job openings ratio	Factors to gauge the momentum of recovery in domestic demand

Overseas Market/News

Overseas, AI investment is supporting the stock market.

On the other hand, the number of job openings in the United States decreased to 6.866 million in March, and there are varying degrees of strength in employment. Although hiring is increasing, this does not unilaterally strengthen expectations for interest rate cuts.

If US interest rates remain high, it will weigh on growth stocks.

Japanese Domestic News

Domestically, the focus is on the balance between prices, wage increases, and consumption.

Household spending in February was -1.8% year-on-year in real terms. The fact that high prices are suppressing consumption is a risk that should be confirmed for domestic demand stocks.

The wage increase rate in the spring labor union is in the 5% range, but it is still being confirmed whether it will be reflected in real consumption.

Exchange rate changes

If the yen continues to be weak, it will be a tailwind for export, semiconductor, and machinery stocks.

If the yen strengthens, stocks that benefit from lower import costs, such as food, electricity, air transportation, and retail, will be more likely to be reconsidered.

The end of Golden Week is a time to factor in the risk of sudden changes in exchange rates, rather than focusing solely on the benefits of a weaker yen.

Japanese consumption/recruitment

Consumption is weak.

Household spending is negative in real terms, and the effects of high prices remain.

Recruitment has also slowed down somewhat.

In March, the active job openings-to-applicants ratio was 1.18 times, and the unemployment rate was 2.7%. Although the employment environment has not collapsed, it is difficult to say that it is in a strong improvement phase.

Implications for stock prices

There are three positive ingredients.

Materials	Contents
AI demand	Support for semiconductors and electronic components
Weak yen	Boosting performance of exporting companies
Overseas funds	Return of funds to Japanese stocks

There are also three negative materials.

Materials	Contents
Sense of accomplishment	Fixed profit after Nikkei average approaches 60,000 yen
High oil prices	Increased costs and pressure on consumption
Foreign exchange intervention	Adjustment factors for stocks that benefit from a weak yen

Short term 6 months

The focus is on exchange rates.

If the yen continues to weaken, the Nikkei average will likely remain in the high range.

However, if foreign exchange intervention or expectations for a Bank of Japan interest rate hike become stronger, the market led by export stocks will be susceptible to a temporary collapse.

Mid-term 1 year

In the medium term, corporate performance and consumption after wage increases are important.

AI investment, corporate reform, and stock buybacks are supporting materials.

On the other hand, if consumption remains weak, the valuation of domestic stocks will be limited.

Scenario analysis

bullish：35%
neutral：45%
bearish：20%

Scenario	Conditions	Stock price direction
Bullish	Stable depreciation of yen, solid performance of AI stocks, upward trend in corporate performance	Testing new highs
Neutral	Yen exchange rate is unstable, mixed with positive and negative factors	Struggling in high price range
Bearish	Rapidly appreciating yen, high crude oil prices, correction in US stocks, deterioration in consumption	Adjustment signs are growing

Risk

Risk	Contents
Foreign exchange	Sudden changes due to intervention and Bank of Japan policy
Crude oil	Cost increase, consumption pressure
US interest rates	The burden of growth stocks
Consumption	Slowing performance of domestic demand stocks
Geopolitics	Fluctuations in resource prices due to the situation in the Middle East

Summary

Japanese stocks are ``neutral'' after Golden Week.

The uptrend remains.

However, I feel a sense of accomplishment after the Nikkei average approached 60,000 yen.

The next focus will be on the yen exchange rate, US stocks, domestic consumption, and corporate financial results.

This is a phase where it is easy to see a shift of funds not only into export stocks, but also into stocks that benefit from the strong yen and into domestic demand stocks.

Reference materials

This article is for educational and informational purposes only, based on public information. It is not a recommendation or solicitation to buy or sell any specific security or financial product. Although care is taken with accuracy, the content and future investment outcomes are not guaranteed. Final investment decisions should be made at your own judgment and responsibility.