The Nikkei 225 remained subdued last week ahead of U.S. events, while funds flowed into value and small- and mid-cap stocks, keeping overall demand for Japanese equities firm. This week, movements in U.S. interest rates and the release of key economic indicators are expected to be the market's focus.
In the domestic equity market last week, attention focused on the market's reaction to Nvidia's earnings as investors remained cautious ahead of the Jackson Hole meeting in the United States. The Nikkei 225 nevertheless ended trading ¥389 higher than the previous Friday, at ¥66,405. Although the index rose at times in the initial phase of trading, buying momentum was limited ahead of the Jackson Hole meeting.
Meanwhile, indices other than the Nikkei 225 remained firm, with TOPIX and the TSE Growth 250 Index outperforming the Nikkei 225. Although investor interest broadened and funds continued to flow into value and small- and mid-cap stocks, the prevailing view was that the market as a whole lacked the strength to push higher. Japanese equities remained vulnerable to shifts in direction depending on the performance of U.S. stocks.
This week, the release of important U.S. data, including the employment report and ISM business conditions indices at the start of the month, is expected to influence the Japanese market through developments in the U.S. equity market. After the 28 August close, the Nikkei 225 futures night-session close came in at ¥65,830, below the previous day's close. Movements in U.S. long-term interest rates are also expected to be a factor affecting interest-rate movements in both the United States and Japan.