Increased volatility in Japanese stocks due to Trump presidency speculation and interest rate uncertainty.

From Investing.com: 2024-07-19 02:53:53

Japanese stocks could see increased volatility due to speculation around a Trump presidency and lower U.S. interest rates. Uncertainty over the Bank of Japan’s interest rate plans also contributes to market instability. Investors are shifting towards more economically-sensitive sectors, moving away from technology stocks towards growth-sensitive sectors.

Global expectations of a second Trump presidency are driving the “Trump trade” and impacting the Japanese stock market. Large-cap technology stocks have been key drivers but recent sessions have seen a shift towards mid-to-small capital stocks. While major indexes hit record highs recently, they have since fallen but are still up about 20% for the year.

BoFA recommends caution in shifting investments away from technology stocks but advises exploring stocks sensitive to domestic demand. They suggest favoring mid-caps over small-caps and believe large-cap stocks will continue to be popular among investors. The brokerage downplays concerns about potential interest rate hikes under a Trump presidency, stating it is more likely following different economic circumstances in his first term.

Looking ahead, BoFA anticipates a potentially volatile July-September period for Japanese markets but predict a rise in October-December when factors like the BoJ’s decision on interest rates, the Fed’s outlook, and the U.S. presidential election are clearer. They expect a 10 basis point rate hike at the BOJ’s end-July meeting.



Read more at Investing.com: Japan stocks face volatility amid “Trump trade,” rate uncertainty- BoFA By Investing.com