The Nikkei Average rose on gains in semiconductor stocks, but profit-taking by overseas short-term traders has been identified as a focal point for the market's subsequent direction.
In the US equity market, the Dow Jones Industrial Average staged a modest rebound in early October, supported by receding expectations of an early Fed rate hike and movements in long-term interest rates. At the same time, buying was restrained at times ahead of the employment report due on 2 October. Oil prices also affected market sentiment, with WTI futures briefly moving to elevated levels.
In Japan, the Nikkei Average ended sharply higher on 1 October, supported by firm semiconductor stocks, but fell back the following day as profit-taking spread. AI and semiconductor-related stocks contributed, although buying was not necessarily broad-based, and differences in performance between stocks were pronounced. The TOPIX and JPX Prime Index also showed mixed moves.
The Nikkei Average fell sharply on 2 October as sentiment strengthened around waiting to assess the impact of higher oil prices and the US employment report. Semiconductor-related stocks provided support among the leading contributors in some cases, but declines in certain stocks, including SoftBank Group, were also notable. Overall, increased stock borrowing and lending and selling pressure were present together.
Alongside spillover from the US market, attention was also drawn to developments in the Chinese and Japanese markets. The Shanghai market was closed for a holiday, while developments in the US-China energy and product markets affected sentiment. In Japan, the Nikkei Average's rebound failed to last, and profit-taking by overseas short-term traders may become a focus going forward.