The Nikkei 225 extended its upward momentum, reaching a new high near 66,500 and adding nearly 10% over the past month. Compared with the same period last year, the index rose about 74%. Capital flows remain optimistic as global risk appetite improves and technology stocks lead. Expectations for AI, corporate earnings, and a weaker Japanese yen support the rally. Semiconductor, technology, and artificial intelligence related stocks attract strong inflows, including Tokyo Electron, Advantest, and SoftBank Group. Yen weakness boosts exporters by increasing the local-currency value of overseas revenue, improving earnings expectations for automobiles, machinery, electronics, and semiconductors. Risks include potential Bank of Japan interest rate increases, elevated oil prices raising import costs and inflation pressure, rising 10-year government bond yields pressuring equity valuations, and USDJPY moves toward or above 160.
"The Nikkei 225 continued to maintain its strong upward momentum this morning, reaching a new high near the 66,500-point level and extending the impressive rally in Japan's equity market. Over the past month, the index has gained nearly 10%, while compared with the same period last year, it has risen by approximately 74%. This performance shows that capital flows remain optimistic toward the Japanese market, especially as global risk appetite improves and technology stocks continue to play a leading role."
"The main drivers supporting the Nikkei 225 come from expectations surrounding AI, the outlook for corporate earnings, and the weakness of the Japanese yen. Stocks related to semiconductors, technology, and artificial intelligence continue to attract strong inflows, with notable names such as Tokyo Electron, Advantest, and SoftBank Group. In addition, a weaker yen continues to benefit Japanese exporters, as overseas revenue translates into higher value when converted back into the local currency. This helps improve earnings expectations, particularly for sectors such as automobiles, machinery, electronics, and semiconductors."
"However, the strong rally in the Nikkei 225 also comes with several potential risks. First, the market is closely watching the possibility that the Bank of Japan may continue raising interest rates in the period ahead, especially as inflationary pressure has not fully eased. Oil prices remaining at elevated levels due to geopolitical risks in the Middle East could increase Japan's energy import costs, adding further pressure to inflation and giving the BoJ more reason to maintain a cautious policy stance. In addition, the rise in Japan's 10-year government bond yield could also put pressure on equity valuations, particularly for high-growth stocks."
"Another risk to watch is the movement of the USDJPY exchange rate. A weaker yen supports exporters, but if USDJPY continues to approach or break above the psychological 160 level, the risk of currency"
Read at London Business News | Londonlovesbusiness.com
Unable to calculate read time
Collection
[
|
...
]