The Nikkei recovered to the ¥70,000 level for the first time in about three months. While AI stocks are driving the market higher, the risk of a broad sell-off remains due to the renewed European debt crisis and rising long-term interest rates. Some positive factors are also emerging among domestic-demand sectors such as retail.
The Nikkei rose last week on the strength of AI stocks and reached the ¥70,000 level this week for the first time in about three months. However, concerns about a renewed European debt crisis and rising long-term interest rates are weighing on the market, heightening caution over the outlook.
In the U.S. market, slowing employment indicators and rising long-term interest rates are continuing, potentially having a negative effect on U.S. equities. In Europe, selling of long-term French government bonds has intensified, weighing on bank stocks.
In Japan, a weaker yen and positive developments in retail are supporting the market, while higher long-term interest rates could put downward pressure on interest-rate-sensitive stocks. The Nobel Prize announcements and the progress of earnings releases will also be market focal points.
This week's focal points are the release of the minutes of the U.S. FOMC meeting, comments from the Bank of Japan, the shipment of corporate earnings releases, and how to assess the balance between domestic-demand and AI stocks. These factors could determine the market's direction.