US stocks rose on growing expectations of a US-Iran agreement, but volatility remains possible depending on semiconductor stock trends and earnings results. For Japanese stocks, attention should be paid to both expanding AI demand and the sluggish general-purpose semiconductor market, given the semiconductor cycle's 3-to-4-year pattern.
In the US equity market, the Dow Jones Industrial Average remained at elevated levels, continuing to set new highs at the beginning of August. On 3 August, it rose approximately 1.3% from the previous weekend, reaching its highest level in about a month, and on 4 August it gained more than approximately $1,000. Expectations of easing tensions in the Middle East and inflows into technology stocks, including AI-related names, were reported to be behind the gains. The market rose further on 5 August, supported by gains in stocks that reported earnings. Semiconductor stocks, however, remained subject to caution, and the SOX index declined.
Market participants said that progress in negotiations between the US and Iran had pushed up stock prices, while pointing out that uncertainty remained over whether an agreement would be reached. Palantir Technologies' earnings showed year-on-year revenue growth and an upward revision to its profit outlook, which was well received. Movements in stocks such as Caterpillar, Amgen and Nvidia also supported the broader market advance. Attention was also drawn to the continued trading of SpaceX shares below their public offering price following the IPO.
In the crude oil market, developments surrounding the Strait of Hormuz affected equity markets, while expectations of an agreement and movements in crude oil futures pointed in mixed directions. A surge in diesel prices was cited as another factor affecting the Japanese market, while interest rate movements and expectations of a Federal Reserve rate hike were also identified as market risks. Attention was also focused on economic indicators including US employment data and the ISM Services PMI.
In China, the Shanghai Composite fell, while the market showed signs of recovery on 4 and 5 August. Technology and property-related stocks moved higher at times against a backdrop of pressure for a weaker renminbi and expectations of measures to support domestic demand. Declines in the services PMI and manufacturing PMI pointed to uncertainty over the economic outlook, while reports continued to indicate that additional economic measures were under consideration.