The Tokyo market is expected to move next week on the back of US CPI data and earnings from major semiconductor companies, while the Nikkei Average is expected to test a recovery to the ¥70,000 level. Expectations for expanding AI demand, together with movements in crude oil prices and long-term interest rates, may produce mixed upward and downward moves.
The Tokyo stock market is expected to trade cautiously next week ahead of US inflation and consumer-related data and quarterly earnings from major overseas semiconductor companies. With a market holiday in between, overseas developments are expected to be incorporated at once, and while expectations for expanding AI demand are likely to support the market, high crude oil prices and elevated long-term interest rates are expected to cap gains.
The Nikkei Average ended this week up ¥721.46 from the previous weekend at ¥69,030.92, and at one point recovered to the ¥70,000 level. While this marked a recovery to the ¥70,000 level for the first time since 6 July, profit-taking in the latter half of the week and adjustments to the market's overheated conditions were also factors of concern.
The main focus next week will be the US September consumer price index (CPI), due to be released on the 14th, and daily data on the 15th, including retail sales and the PPI for the same month. While pricing in a Federal Reserve rate hold and the possibility of an additional rate hike in December, the market will closely monitor energy prices and trends in real consumption.
Earnings from major semiconductor companies will also be key to the fate of Japanese equities. ASML is expected to raise its full-year outlook, while TSMC has announced record-high sales for the July-September quarter. In Japan, order trends and capital investment outlooks are expected to influence share prices.