The domestic equity market has entered a phase with few catalysts following the completion of earnings announcements, while buying interest in individual stocks has weakened. Expectations of a delayed U.S. rate hike and the performance of AI-related stocks are driving growing speculation that the market could turn sharply in either direction.
The Nikkei 225 ended the week at ¥68,713.80, up ¥3,107.09, or 4.7%, from the previous weekend, maintaining an upward trend throughout the week. Following the U.S. employment report, AI- and semiconductor-related stocks were bought against a backdrop of gains in U.S. equities.
Reports that employment had declined in the U.S. reduced expectations of an early rate hike by the Fed, supporting market sentiment and leading to stronger buying, particularly in technology stocks, from the start of the week. Some viewed gains in South Korean equities as another factor supporting the market.
The Nikkei 225 also rose for a fourth consecutive session on the 14th, at one point gaining approximately ¥1,300. A downside surprise in the U.S. producer price index eased inflation concerns, and, together with the employment report and CPI results, contributed to a further reduction in rate-hike expectations. Memory-related stocks were particularly prominent.
As earnings announcements largely draw to a close, expectations have grown that the market will increasingly favor theme-based stock selection. Attention focused on themes including demand related to AI data center investment and expectations for expansion of the generative AI market.