In the afternoon trading on August 2nd, we want to pay attention to the following three points.

- The Nikkei Average dropped significantly and temporarily fell more than 2000 yen, with only 7 Nikkei Average stocks rising.

- The dollar-yen rate is leveling off, focusing on Japanese stocks.

- Tokyo Electron <8035> is the top declining stock contributor, followed by Advantest <6857>.

The Nikkei Average dropped significantly and temporarily fell more than 2000 yen, with only 7 Nikkei Average stocks rising.

The Nikkei Average fell significantly. At the end of the morning session, it was down 1,864.48 yen (-4.89%) from the previous day to 36,261.85 yen (with a volume of approximately 1.504 billion shares).

The U.S. stock market fell sharply on the first day. The Dow Jones average fell 494.82 points (-1.21%) to 40,347.97, the Nasdaq fell 405.26 points (-2.30%) to 17,194.14, and the S&P 500 fell 75.62 points (-1.37%) to 5,446.68 at the end of trading. Purchases based on expectations of a rate cut continued and rose after opening. However, fears of a rapid economic downturn arose when unemployment insurance claims reached their highest level in a year and the ISM manufacturing purchasing managers' index unexpectedly fell, causing selling to accelerate and the market to turn down. There was also caution under the weight of major high-tech company earnings to come. The market remained sluggish all day and the decline widened toward the end.

The Tokyo market opened with a dominant selling mood following the decline in U.S. stocks and the appreciation of the yen. Semiconductor stocks dropped sharply, as the Philadelphia Semiconductor Stock Index (SOX) fell more than 7% from the previous day, causing the Nikkei average to fall below 37,000 yen in one go. The downtrend called forth further selling, and at one point, the Nikkei's decline exceeded 2,000 yen. 97% of the Prime market's trading volume in the morning was bearish, and the entire market was depressed. In Nikkei average constituent stocks, securities stocks, including Daiwa Securities Group headquarters <8601> and Nomura Holdings <8604>, fell sharply, as did semiconductor stocks such as Screen HD <7735>, Tokyo Electron <8035>, Socionext <6526>, SUMCO <3436>, Lasertec <6920>, and Advantest <6857>. A wide range of stocks, such as Mitsukoshi Isetan <3099>, Mitsui & Co. <8031>, Ebara Corporation <6361>, Mitsui Chemicals <4183>, Nippon Steel <5631>, Mitsubishi Heavy Industries <7011>, Mitsubishi UFJ <8306>, and Hitachi <6501>, were sold off.

In the adopted Nikkei average stocks, securities stocks such as Daiwa Securities Group Headquarters <8601>, Nomura Holdings <8604>, etc. experienced severe declines along with semiconductor stocks including Screen HD <7735>, Tokyo Electron <8035>, Socionext <6526>, SUMCO <3436>, Laser Tech <6920> and Advantest <6857> due to the market downturn. In addition to these, a wide range of stocks such as Mitsukoshi Isetan <3099>, Mitsui & Co. <8031>, Ebara Corporation <6361>, Mitsui Chemicals <4183>, Nippon Steel <5631>, Mitsubishi Heavy Industries <7011>, Mitsubishi UFJ Financial Group <8306>, and Hitachi <6501> were sold.

On the other hand, Japan Ham <2282>, which exceeded expectations for the first quarter earnings due to the good performance of the Australian market, and Konami Group <9766>, Sumitomo Electric <5802>, and Nippon Steel <5401> were also bought on the basis of good results. Astellas Pharma <4503>, Kyowa Kirin <4151>, and Tokyo Gas <9531> rose. The Nikkei average constituent stocks that rose were only these seven issues.

In the midst of selling in all industries, securities and commodity futures trading, insurance, banking, electric appliances, and mining showed prominent declines.

Following a historical sharp decline in the Nikkei average, the Nikkei VI surged to the 28-point range, and investor sentiment is rapidly deteriorating. It seems that stop-loss selling was triggered by the fact that it fell below the 200-day moving average line for the first time this year, but investors who saw the trading volume of 3 trillion yen in the morning today also believed that there are investors who buy on the lower side. With extremely high caution towards tonight's July U.S. employment statistics, it is unlikely that the Nikkei average will see a rapid reduction in its decline; but it is worth keeping an eye on a rebound around the 36,860 yen level where the 200-day moving average line is located.

- The dollar-yen rate is leveling off, focusing on Japanese stocks.

In the Tokyo market on the 2nd, the dollar-yen rate was leveling off. The risk-averse yen buying preceded the Nikkei Average's historic sharp decline, causing the rate to drop to 148.82 yen at one point. On the other hand, with a slowdown in the decline of the yield of 10-year US bonds, dollar selling receded. The dollar was bought back from its bargain price, and recovered near its high.

The trading range so far is 148.82 yen to 149.77 yen for the dollar-yen rate, 160.65 yen to 161.59 yen for the euro-yen rate, and 1.0782 dollars to 1.0793 dollars for the euro-dollar rate.

Check stocks for the afternoon session

- JVC Kenwood <6632> and Plathome <6836> hit the daily upper limit.

*Includes temporary stopper (indicated price)

- Tokyo Electron <8035> was the top declining stock contributor, followed by Advantest <6857>.

Economic indicators and remarks by important people

[Economic indicators]

Australia's trade balance in June: +5.589 billion Australian dollars (expected: +5 billion Australian dollars, May: +5.052 billion Australian dollars ← +5.773 billion Australian dollars)

China's Caixin manufacturing PMI in July: 49.8 (expected: 51.5, June: 51.8).

[Important Person's Remarks]

- Powell, FRB Chairman.

"Aiming for a slowdown in demand, and maintaining a tightening stance."

"Focusing on balance with two responsibilities."

"Strongly pledge to achieve the 2% inflation target."

"Balance the supply and demand in the labor market."

"The pace of spending is slowing down but remains strong."

"Depending on the economic development, there may be modifications to the monetary policy."

"As long as the economy continues to be strong, we will maintain the interest rate as necessary."

"The committee feels that a rate cut is approaching."

"At the September meeting, a rate cut may become an option."

Not applicable.

- 3:30 pm: Swiss July Consumer Price Index (YoY estimated: +1.3%, June: +1.3%)