The Nikkei Average is expected to edge lower in the afternoon, while the dollar-yen pair is likely to remain firm. Fast Retailing and SoftBank Group are cited as the top negative contributors.
The Nikkei Average was down slightly at around 65968.71 yen in the morning session, with trading volume estimated at more than 900 million shares. Although the overall market was supported by gains in U.S. stocks, trading remained directionless amid movements in oil prices and resource-related stocks.
The afternoon session is expected to be influenced by movements in long-term interest rates in Japan and the United States, as well as AI- and semiconductor-related stocks, with gains likely to remain capped. At the same time, expectations of easing tensions in the Middle East could help ease concerns about a further rise in oil prices.
The dollar-yen pair traded in the 158.70-159.00 yen range. Dollar buying to cover short positions emerged early in the session, and the currency pair showed a modest recovery in the afternoon.
Among stocks to watch in the afternoon session, Architects Studio Japan at one point remained near its daily limit-up level, while Fast Retailing and SoftBank Group were cited as the top negative contributors. Tokyo Electron, Sumitomo Metal Mining and Hitachi Construction Machinery showed relatively firm performance.
By sector, machinery, construction and other products rose, while mining, electric power and gas, and information and communications declined. The view is that the overall market will continue to be dominated by a strong wait-and-see mood in the afternoon.