The Nikkei Average has recovered the ¥70,000 level for the first time in 3 months, and it has been reported that further upside may be possible depending on upward revisions to earnings at the interim results. At the same time, concerns related to a prolonged period of rising interest rates have also been noted.
The Nikkei Stock Average recovered the ¥70,000 level on a closing-price basis on 6 and 7 October, reaching that level for the first time in 3 months. Against a backdrop of expanding demand for AI and semiconductor-related products and yen depreciation, it hit an all-time high in June, but subsequently entered a correction phase and remained in the ¥60,000 range. With upward revisions to full-year outlooks expected ahead of the interim results, some have pointed to the possibility that the Nikkei Average could test new highs again.
Rising interest rates are cited as a risk factor, however. With the Bank of Japan considering additional rate hikes and long-term interest rates remaining elevated, the yield spread has narrowed, and it is said that a shock could trigger a sharp decline in share prices. There is also a view that downward pressure on share prices could intensify if rising interest rates increase concerns about prolonged inflation or deteriorating fiscal conditions, rather than remaining “good rate rises.”
Improved corporate earnings outlooks, the sustainability of AI-related investment and the trend toward yen depreciation are cited as factors supporting upward revisions at the interim results. If external factors do not deteriorate significantly, the market is expected to remain in an upward trend.