US equities saw notable selling in AI and semiconductor-related stocks as higher interest rates and uncertainty over the situation in Iran weighed on the market. In Japanese equities, the focus is on whether the Nikkei Average will change from rising to falling, with the outlook becoming increasingly uncertain toward late August.
In the US equity market, rising long-term interest rates and higher oil prices weighed on share prices from mid-August onward, with selling prevailing mainly in AI and semiconductor-related stocks. The Dow Jones Industrial Average continued to decline from 17 to 18 August, while the SOX Index also ended sharply lower. On 19 August, the US Treasury announced plans to raise the ceiling on Treasury buybacks, temporarily easing upward pressure on long-term interest rates, while overall awareness of high valuations grew stronger.
Meanwhile, Chinese markets showed mixed movements from 17 to 19 August, with the Shanghai Composite down 95 points from the previous day on 19 August and at one point falling below 4,000. The impact of US interest rates and uncertainty over the situation in the Middle East weighed on markets and spread to Japan. Reports indicated that growth in China's July industrial production slowed, while indicators for retail sales and fixed-asset investment also weakened, raising concerns over a delayed recovery in domestic demand.
In the Japanese equity market, the sharp decline in the Nikkei Average on 18 August and continued downward pressure thereafter reflected a reaction to its sharp rise on 17 August. The boost from AI and semiconductor-related stocks paused, while movements in stocks with the largest contributions also became more volatile against a backdrop of rising long-term interest rates. With overall market PERs remaining elevated amid a high-interest-rate environment, Japanese equities are at a critical juncture as their trend could change from rising to falling.