As expectations for higher U.S. interest rates resurfaced, concerns over valuations of AI and semiconductor stocks spread, affecting the Japanese market as well. This is a summary of developments on 27–28 August.
On 27 August, the Dow Jones Industrial Average closed up ¥105 in the U.S. stock market, while the Nasdaq rose sharply on the strength of AI-related stocks. NVIDIA's solid earnings outlook supported market expectations, sending the SOX higher. Earnings reports from Salesforce and CrowdStrike eased market risk concerns, prompting buying in technology stocks.
On 28 August, the Dow Jones Industrial Average was almost flat, but rising long-term yields weighed on semiconductor stocks, sending the SOX down 3.4%. Ahead of Chair Warsh's speech, expectations for higher interest rates grew, prompting concerns over equity valuations.
In China, the Shanghai Composite rose 1.13% on 27 August for a third consecutive day, supported by expectations for domestic economic stimulus and policies to promote AI technology. It fell back on 28 August, however, as investors adopted a wait-and-see stance. The impact of developments in U.S. interest rates and uncertainty surrounding the situation in the Middle East also weighed on the market.
Japanese stocks initially rose by more than ¥800 on 27 August, but selling to adjust positions amid yield concerns emerged toward the afternoon session, and the Nikkei 225 ultimately closed down ¥130. On 28 August, AI- and semiconductor-related stocks continued to attract buying at times, but gains were capped by the impact of rising long-term yields. The TOPIX edged higher, while trading remained light in the Prime Market as growth stocks became more active.