Tuesday, October 20, 2026 [Forecast] US tech stocks have rebounded, but I suspect the Nikkei Stock Average will start with a wait-and-see approach
Summary for this morning
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US stocks were mixed, with the Dow falling slightly and the Nasdaq rising by over 1%.
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Nikkei 225 futures (CME) are at 64,825 yen, which is 155 yen lower than the closing price at the Osaka Exchange. The outlook for the opening is slightly weak.
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US long-term interest rates are in the 5% range, crude oil is over $100, and the dollar-yen is in the 158 yen range; these are overlapping factors of concern.
Organizing the factors
US Market (19th)
The Dow Jones Industrial Average was $51,966.03, down $36.38 (-0.07%). The S&P 500 was at 7,690.73, up 31.29 points (+0.41%). The Nasdaq was at 26,430.89, up 290.86 points (+1.11%).
Buying returned to IT and tech stocks, and the semiconductor stock index rose for the first time in 9 trading days. On the other hand, the Dow fell slightly as defensive stocks and economically sensitive stocks were sold.
Futures
Futures are transactions where future buying and selling are agreed upon at the present time. They are used as a guide to gauge the direction of stock prices. CME Nikkei 225 futures were at 64,825 yen, down 155 yen (-0.24%) compared to the closing price at the Osaka Exchange.
Exchange Rates, Interest Rates, and Commodities
The dollar-yen was at 158.50 yen, a depreciation of the yen and appreciation of the dollar by 0.48 yen from the previous day. The euro-yen was 177.73 yen, and the euro-dollar was 1.1213 dollars.
The yield on the US 10-year Treasury note (long-term interest rate) was 5.14%, up 0.07%. When interest rates rise, the movement to buy dollars tends to strengthen.
WTI crude oil (November delivery) was $103.66 per barrel, rising for the 8th consecutive trading day. Gold futures were $4,160.1 per ounce, down $21.
News
Instability in the Middle East continues, and there are concerns about crude oil supply. When crude oil is expensive, vigilance against inflation (rising prices) intensifies, making it easier for bonds to be sold and interest rates to rise.
Earnings reports for companies like Meta and Tesla are also scheduled for this week. Before major announcements, it is a period when wait-and-see trading tends to increase.
Today’s Forecast
The direction is ‘slightly weak at the opening, followed by consolidation.’ That is my prediction of how it might go.
There are three reasons for this. First, futures are 155 yen lower than the Osaka closing price, making it easy to start with selling. Second, the rise in US long-term interest rates and high crude oil prices are likely to weigh on stocks. Third, the rise in the Nasdaq and the weaker yen are likely to support the downside.
The expected range is 64,300 yen to 65,300 yen. This is merely a guideline based on the futures level, with a range of just under 1% up or down.
Key Points
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Semiconductor/AI-related: I want to see if the buying momentum from the US will reach Japan as well.
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Export-related sectors: A weaker yen is said to be a tailwind for companies that earn revenue overseas.
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Interest rate-sensitive sectors: When long-term interest rates rise, the movement of banks and other institutions can change.
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Today’s schedule: China’s Loan Prime Rate (10:00), 20-year JGB auction, Germany’s ZEW Economic Sentiment Index (18:00), and US housing starts (21:30). Earnings for US companies like Netflix are also scheduled.
I will review the results in the evening
This evening, I will look back at whether the opening direction and range were accurate. It is okay if they were off. Let’s look at why they deviated together.
Forecast Notes
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Direction: Opening slightly weak, consolidation throughout the day
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Expected range: 64,300 yen to 65,300 yen (guideline)
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Main rationale: CME futures are 155 yen lower than the Osaka closing price / US long-term interest rate at 5.14% and crude oil in the $103 range / Nasdaq gains and yen weakness in the 158 range providing support
Disclaimer
This article represents personal views and is not investment advice. Please make investment decisions at your own risk.