Japanese stocks are expected to remain firm in the second week of August, supported by strong corporate earnings and a succession of share-buyback announcements. At the same time, developments in the Middle East and inflation could weigh on the market.
Japanese stocks are expected to remain firm in the second week of August (10–14 August), with strong corporate earnings and share-buyback announcements cited as factors supporting the market. Given the market's high weighting in technology stocks, an excessive decline is expected to be contained.
In the first week, buying prevailed on strong corporate earnings and expectations for developments involving the US and Iran, lifting the TOPIX 1.8%. The Nikkei Stock Average also rose 1.9% as concerns over AI-related stocks eased, improving market sentiment.
The focus ahead will be developments in the Middle East and inflation indicators. US CPI and core CPI data could affect expectations for Federal Reserve rate hikes, with particular attention on the forecast that July core CPI will rise 2.5% year on year.
Market participants said the strength of earnings and the scale of share buybacks should continue to support supply and demand, while noting that reliance on developments in the Middle East could make the market prone to swings.