Institution: Japanese investors are expected to shift their focus back to market fundamentals.

Masahiko Loo, a strategist at Dowa Investment Management, stated in a report that once geopolitical risks and soaring oil prices ease, investors in Japanese stocks, bonds, and the yen may shift their focus from shock-driven trades back to fundamentals. Loo noted that the selling of these asset classes occurred after the escalation of tensions in the Middle East, reflecting Japan's limited energy buffer capacity and the impact of soaring oil prices on its trade balance. Looking ahead, he expects the Japanese stock market to receive support from resilient earnings, sustained wage growth, and ongoing governance reforms. The reduction of uncertainty may also help alleviate the steepening bearish trend in Japanese government bonds, leading to a return to policy-driven trading patterns. At the same time, with diminishing safe-haven sentiment, downward pressure on the yen may ease.