Market views· Sector Analyst
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The Japanese market currently reflects strong risk-off sentiment, with defensive sectors significantly outperforming cyclical sectors in an ongoing rotation. The average relative strength of defensive sectors stands at +9.30%, compared to +4.61% for cyclical sectors, resulting in a spread of -4.69%. This indicates a clear preference for safe-haven assets amid broader concerns over an economic slowdown. While overall rotation momentum is accelerating, low correlations between sectors highlight market uncertainty.
Action: The market is currently in a 'slowdown' phase dominated by economic slowdown concerns. Investors should focus on risk management by overweighting defensive sectors and underweighting cyclical sectors.
| # | Type | |||||
|---|---|---|---|---|---|---|
| 1 | Pharmaceutical 1621.T | DEF | +16.91% | +12.32% | −1.51% | +23.86 |
| 2 | Real Estate 1633.T | DEF | +13.45% | −0.28% | −18.31% | +22.39 |
| 3 | Retail 1630.T | CYC | +13.41% | +2.32% | −0.61% | +20.67 |
| 4 | Automobile 1622.T | CYC | +12.70% | +2.58% | −0.68% | +22.62 |
| 5 | Energy Resources 1618.T | CYC | +12.67% | +12.84% | −0.28% | +16.60 |
| 6 | Foods 1617.T | DEF | +12.55% | +5.68% | +4.70% | +19.38 |
| 7 | Transportation 1628.T | DEF | +12.54% | +6.15% | +1.26% | +18.17 |
| 8 | Financials ex-Banks 1632.T | DEF | +11.52% | +1.99% | +8.52% | +17.70 |
| 9 | Trading/Wholesale 1629.T | CYC | +9.57% | +6.68% | −8.19% | +12.69 |
| 10 | IT/Services 1626.T | CYC | +8.11% | +12.50% | +11.85% | +12.20 |
| 11 | Chemicals 1620.T | DEF | +6.92% | +3.15% | −2.73% | +10.97 |
| 12 | Electric Power/Gas 1627.T | DEF | +6.81% | +5.69% | −6.47% | +11.53 |
| 13 | Construction 1619.T | DEF | +2.51% | −5.53% | −20.36% | +6.58 |
| 14 | Banks 1631.T | DEF | +0.48% | −1.15% | +7.16% | +4.54 |
| 15 | Machinery 1624.T | CYC | −2.82% | −8.08% | −24.75% | −0.93 |
| 16 | Electronics 1625.T | CYC | −3.81% | −4.44% | −5.44% | −4.21 |
| 17 | Steel/Nonferrous 1623.T | CYC | −12.97% | −9.11% | −36.44% | −10.41 |
Stable performance is expected amid market risk-off sentiment, supported by strong relative strength and momentum.
Expected to deliver stable returns amid market volatility, maintaining defensive characteristics along with consistent relative strength and momentum.
As a defensive sector, it exhibits robust relative strength and momentum, offering protection against downside market risks.
Displays severe relative strength weakness and negative momentum across all timeframes, indicating high risk of further declines.
Records persistent relative strength weakness and negative momentum, making it one of the sectors most vulnerable to economic slowdown.
Shows negative relative strength and momentum, aligning with the overall weak trend of cyclical sectors.
The Pharmaceuticals sector is the top performer, surging against the benchmark with a 20-day RS of +16.91%. It maintains robust relative strength across all timeframes and high momentum of +23.86, attracting strong buying interest amid the market's risk-averse sentiment due to its defensive characteristics.
The Real Estate sector ranks second with a sharp rise, posting a 20-day RS of +13.45%. While recent momentum is very strong at +22.39, the 120-day relative strength of -18.31% indicates long-term weakness, suggesting this may be a short-term rebound or temporary strength driven by a preference for safe-haven assets.
The Retail sector surged with a 20-day RS of +13.41%, ranking among the top performers. Notably, it demonstrated strong momentum of +20.67 despite being a cyclical sector. This suggests strength in specific consumer goods segments or differentiated performance within certain cyclical sectors amid market risk aversion.
The Machinery sector recorded a 20-day RS of -2.82%, slightly underperforming the benchmark, with negative relative strength across all timeframes and negative momentum of -0.93. This reflects broad weakness in cyclical sectors amid economic slowdown concerns, with continued underperformance expected.
The Steel/Non-ferrous Metals sector plunged with a 20-day RS of -12.97%, ranking as the worst performer against the benchmark. The 120-day relative strength dropped sharply to -36.44%, and momentum is extremely weak at -10.41. This indicates severe weakness driven by a combination of global economic slowdown and concerns over declining raw material demand.
The market is currently exhibiting a clear rotation from cyclical sectors to defensive sectors.
The average 20-day RS for defensive sectors is +9.30%, significantly outperforming the average +4.61% for cyclical sectors, confirming a -4.69% spread and a 'risk_off' bias. Defensive sectors, including Pharmaceuticals, Real Estate, Food, Transportation, and Financials (excluding Banks), dominate the top performers, while cyclical sectors such as Machinery, Electronics, and Steel/Non-ferrous Metals are concentrated among the bottom performers.
Key driver: Market participants are favoring safe-haven assets amid concerns over an economic slowdown.
Sector ETF prices relative to Nikkei 225 from AlphaLenz's daily price database, 2 Nov 2026.