Japan's stock market was highly volatile in July 2026, with trading disrupted by supply chain concerns stemming from the Kumamoto earthquake and developments in semiconductor-related stocks. Minegishi (峯岸), an analyst, discussed the outlook for August and the factors behind the stocks attracting attention.
The Nikkei 225 fell sharply in July 2026, declining approximately ¥5,700, or 8.14%, over the month, according to reports. On 17 July, it at one point fell ¥2,694 from the previous day, recording the fifth-largest decline on record, as the market experienced sharp volatility.
The decline in AI and semiconductor-related stocks was driven by factors including the development of AI businesses by US companies, the rise of Chinese companies and deteriorating supply and demand conditions, spreading uncertainty across the broader market. Minegishi (峯岸), an analyst, had prepared scenarios in advance and therefore reportedly remained unfazed by the sharp decline while maintaining positive performance.
Following the Kumamoto earthquake, recovery at the Nishiki plant progressed, with production resuming on the night of 29 July and returning to normal operations on 31 July. TSMC's Kumamoto Fab 1 also restored production by 3 August. This reportedly renewed attention on the resilience of domestic production and supply chains.
Minegishi (峯岸), an analyst, explained that the approach places importance on fundamental analysis using 10 to 20 years of historical data, with the basis for buy and sell decisions established around "historical levels" and "market themes." As examples of stocks that offered profit opportunities in July, the analyst cited Daido Metal Co., Ltd., JADE GROUP and Adtec Plasma Technology Co., Ltd., presenting trading decisions based on earnings results and chart patterns.
For August, the impact of buying demand during the rush of earnings announcements and the traditionally quiet summer market is considered limited, while a cautious view has been expressed on a reassessment of semiconductor stocks. The reported stance is to remain alert to the outlook for AI demand while monitoring developments in stocks such as Kioxia. Overall, the emphasis is on continuing to manage investments through data-based scenarios rather than relying on certainty that prices will rise.