Core Viewpoint - The Nikkei 225 index futures rose by 0.9% following the announcement of a trade agreement between Trump and Japan [1] Group 1 - The announcement of the trade agreement has positively impacted market sentiment, reflected in the increase of the Nikkei 225 index futures [1]

Core Viewpoint - The recent Japanese Senate election results have led to increased political uncertainty, impacting the Japanese yen and stock market, with expectations of continued volatility in the coming weeks [1][6][8]. Group 1: Election Impact - The ruling coalition of the Liberal Democratic Party (LDP) and Komeito lost its majority in the Senate for the first time since the LDP's establishment in 1955, raising concerns about Japan's political stability [1][3]. - Prime Minister Shigeru Ishiba expressed his intention to continue governing despite the election setback, emphasizing the responsibility of the ruling party [3][7]. Group 2: Currency and Market Reactions - The yen appreciated slightly against the dollar, recovering some losses from the previous weeks, trading around 148, but remains under pressure due to political uncertainties [2][3]. - Analysts predict that the yen may experience downward volatility, with expectations of trading between 145 and 150 against the dollar in the near term [1][8]. Group 3: Future Outlook - The political uncertainty is expected to weaken investor confidence in Japanese assets, potentially leading to a decline in the Nikkei index [6][8]. - The upcoming U.S.-Japan trade negotiations and the Bank of Japan's monetary policy will be critical factors influencing the yen's performance, with analysts suggesting that the yen's downward pressure may persist due to rising fiscal deficits and bond yields [7][8].

Group 1 - The ruling coalition of the Liberal Democratic Party (LDP) and Komeito lost its majority in the Japanese House of Councillors for the first time since the LDP's establishment in 1955, raising political uncertainty in Japan [1][2] - The Japanese yen appreciated slightly by 0.7% against the US dollar, recovering some losses from the previous week, trading around 148 [1][2] - Analysts expect the yen to face downward pressure due to political uncertainty and concerns over Japan's fiscal policies, with potential fluctuations between 145 and 150 against the dollar [1][3][4] Group 2 - Prime Minister Kishida expressed his intention to continue governing despite the electoral setback, emphasizing the responsibility of the ruling party [2] - Market analysts noted that the political uncertainty could weaken investor confidence in Japanese assets, leading to potential declines in both the yen and the Nikkei index [3][4] - The upcoming US-Japan trade negotiations and the deadline for tariffs on August 1 are critical factors that could influence the yen's performance and Japan's economic outlook [4][5]

Core Viewpoint - The Nikkei 225 index has confirmed a breakthrough above 40,000 points, creating a favorable dual scenario of "index rise and increased volatility," with options market sentiment shifting to support further short-term gains [1]. Group 1: Market Performance - On June 30, Nomura Securities reported that the Nikkei 225 index has significantly risen over several trading days, reaching a new high for the year by surpassing 40,000 points [1]. - Historical data from Nomura indicates that after a sharp rise in call option skew, the index has averaged a gain of over 3% in subsequent trading days since 2010 [5]. Group 2: Options Market Sentiment - The call option skew has sharply increased, rising above the 95th percentile historically, indicating a strong foundation for further increases in the Nikkei 225 index in the short term [1]. - Nomura's analysis suggests that the current market structure and options flow provide strong technical support for the Japanese stock market, with a key resistance level at approximately 41,500 points [8]. Group 3: ETF Dividend Impact - Nomura expects that the upcoming ETF dividends, estimated at around 600 billion yen on July 8 and 900 billion yen on July 10, will not exert significant pressure on the market due to anticipated buying from CTA funds [9][10]. - The firm notes that investors are likely to remember last year's experience when ETF dividends did not catalyze selling pressure, and instead, the Nikkei 225 index reached new highs [9]. Group 4: CTA Fund Activity - Nomura estimates that CTA funds will net buy approximately 600 billion yen in Nikkei 225 index futures over the next four weeks, which could offset any selling pressure related to ETF dividends [10]. - The accumulation of long positions by CTA funds has been noted as a market-moving factor, particularly after the Nikkei 225 index surpassed 39,500 points [12].