Market Shot: 4-Layer Analysis - The Truth About Japanese & US Stocks - Perspectives That Inform Investment Decisions and Reveal Your Next Move

Thank you for visiting. In this Market Shot article, I've conducted a 4-layer analysis of both Japanese and US stock markets. This framework examines markets through four layers: Market, Policy, Trade, and Geopolitics - offering a new comprehensive analytical approach that differs from conventional economic articles.

Even after following news and social media, you often find yourself wondering: "So what does this all mean? Is now a buying opportunity? What will happen to Japanese and US stocks? What about the economy?" With so much similar information online, you're left thinking "So what? What should I actually do?"

This "Market Shot" clears up that confusion in 3 minutes, organizing insights from various data sources across the four layers of Market, Policy, Trade, and Geopolitics to help you see your "next move" for today

■ 4-Layer In-Depth Analysis (Nikkei Average)

Let's analyze the stock market through four layers:

A. Market (Price, Volatility, Supply-Demand)

• Indices: Nikkei -0.69% to 45,043 / TOPIX -1.74% to 3,131. Meanwhile, US markets rebounded on Friday with S&P 500 +0.6%, Dow +0.7% (PCE came in as expected).

• Supply-Demand: Dividend ex-dates for many stocks were a downward factor. Advancers vs. decliners: 22:202, showing broad-based selling.

• Volatility: Nikkei VI remained elevated around 25, while US VIX dropped to 15.29 = US risk-on vs. Japanese caution divergence.

• Implication: Technically, domestic-specific supply-demand factors (dividend ex-dates, high-level caution) and volatility divergence are weighing on upside. Dividend ex-dates were the main factor, with yen appreciation also a drag.

B. Policy (Monetary & Fiscal)

• BOJ: Typically dovish board member Noguchi stated "rate hikes are more necessary than before," strengthening hawkish expectations within the board (views that October rate hike probability has increased). Tankan survey will be released on 10/1.

• Inflation: Tokyo CPI core at 2.5% (September), above target.

• US Fed: Recent expectations continue for rate-cutting cycle entry, with anticipation for additional cuts.

• Implication: Diverging policy directions (Japan = tightening, US = easing) create yen appreciation pressure ⇒ headwind for export-oriented stocks. USD/JPY gradually weakening toward 148 level.

C. Trade (Supply Chain, Logistics, Export Sensitivity)

• Supply Chain: GSCPI at -0.08 in August, generally in normal range. Shipping BDI = 2,259 area, somewhat softening.

• FX: Yen appreciation direction (148 level) creates headwinds for automotive and machinery profitability sensitivity.

• Implication: External demand factors are neutral to slightly negative (yen appreciation > benefits of logistics normalization).

D. Geopolitics (Energy, Political Situation, Security)

• Energy: Kurdistan oil export resumption, OPEC+ production increase speculation pushing oil lower = inflation pressure relief factor for Japan.

• US Government Shutdown Risk: (October 1 fiscal year start) creating noise in global sentiment.

• Domestic Politics: Policy uncertainty ahead of LDP leadership election (10/4).

• Implication: Oil is a tailwind, but risk premium on Japanese stocks remains elevated due to hesitation before policy/political events.

■ Key Results

Figure 1: IRF (Impact of Geopolitical Shocks on Stocks)

• Japanese stocks: Geo shocks cause maximum -1.1 to -1.3% decline (around 1 month later). Then recover about half over 7 weeks.

• US stocks: Impact is smaller at maximum -0.6 to -0.8%. Recovery takes around 9 weeks.

• High volatility periods (when Nikkei VI or VIX are high) amplify the impact further.

👉 The trend is: "Geopolitical risks hit Japanese stocks harder first, while US stocks are relatively resilient. However, both become more sensitive during unstable periods."

Figure 2: FEVD (Decomposition of Stock Price Variation Factors)

• Short-term (4 weeks): For Japanese stocks, Geo (geopolitics) is the largest factor at 28%. For US stocks, Policy is larger.

• Medium-term (12 weeks): Policy becomes the largest factor for both markets.

• Long-term (24 weeks): Policy remains dominant. Trade is the second most important.

👉 The pattern is: "Initially moves on news (Geo), then interest rates and policy (Policy) take effect."

Figure 3: Event Timeline (Policy Schedule and Stock Movements)

• US FOMC (9/16-17): At statement and economic projection releases, US stocks rose and USD/JPY moved toward yen appreciation.

• BOJ Meetings (7/30-31, 9/18-19): When rate hike expectations increased, Japanese stock volatility (Nikkei VI) rose.

👉 Policy events impact stock prices in three stages: "T0 (announcement)" "T1 (implementation)" "T* (turning point when market views change)."

■ Implications for Investors

1. How Shocks Transmit

   • Short-term (several weeks): Stock prices react to Geo risks, especially large for Japanese stocks.

   • Medium-term (several months): Policy rates and monetary policy impacts become dominant.

2. Japanese Stock Strategy

   • Short-term: Export-oriented and heavy industry stocks are high-risk. Easier to allocate funds to defensives (consumer staples, domestic demand stocks).

   • Medium-term: Bank and financial stocks that benefit from rising rates are relatively advantageous.

3. US Stock Strategy

   • Geo risk has smaller direct impact, but interest rate-sensitive growth stocks move significantly depending on policy.

   • Event trading around FOMC requires caution.

4. Hedging Methods

   • Japanese stocks: Put options + USD/JPY short (yen appreciation risk response).

   • US stocks: VIX long or defensive stocks to strengthen protection.

■ Summary for General Audiences

• Geopolitical risks amplify "short-term fluctuations." Japanese stocks are especially sensitive.

• Monetary policy determines "medium-term direction." Ultimately, interest rates and policy drive stocks in both US and Japan.

• Lessons for Investors

  • News (Geo) is a short-term price movement factor

  • Policy (interest rates) is a medium-term trend factor

  • Logistics and trade (Trade) affect through corporate earnings

👉 The important perspective is: "Don't get too swayed by today's news - it's the central banks that move markets six months ahead."

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※ Disclaimer: Investments are at your own risk. This article is for informational purposes only and is not intended as investment solicitation. Please make investment decisions at your own responsibility.