The focus for the Nikkei 225 next week will be whether it can maintain levels in the ¥62,000 range ahead of the FOMC, the Bank of Japan monetary policy meeting and earnings from U.S. hyperscalers. With concerns over AI-related investment still lingering, attention will center on how the market develops following this week's sharp decline.
The Nikkei 225 closed this week down ¥214 from the previous day at ¥62,693, falling sharply in the latter half of the week as concerns over deteriorating finances among AI-related stocks and excessive investment weighed on the market. Following earnings announced by Meta on the 21st, attention turned to the profitability of AI investment and pressure to commit capital, and the Nikkei 225 plunged on the 22nd.
Next week's market drivers include the U.S. Federal Open Market Committee (FOMC), the Bank of Japan monetary policy meeting and earnings from hyperscalers. Market concerns could ease depending on the resilience of AI demand and the outlook for recouping investment, while continued spending on massive investments could exert further downward pressure.
Among next week's earnings reports, Microsoft and Alphabet are scheduled to report on the 28th, followed by Amazon on the 29th. The profitability of AI-related capital investment and improvements in investment efficiency will be closely watched. If these metrics improve, a rebound in U.S. technology stocks could spill over into Japanese equities, although a scenario in which investment costs become more burdensome cannot be ruled out.
The outlook for monetary policy in Japan and the United States will also be important. In Japan, the yen exchange rate and earnings outlook for exporters could be affected depending on the outlook following the Bank of Japan meeting. September CPI rose 2.1% year on year on an all-items basis excluding fresh food, potentially heightening expectations for an additional rate hike.