The Nikkei 225 held up last week despite downward pressure, with US interest-rate trends and the US jobs report in focus, and there were periods of fund inflows into value stocks and small- and mid-cap stocks. This week, the spillover from remarks at Jackson Hole, the release of the US jobs report and supply-and-demand events such as SQ are expected to coincide.
In Japan's equity market last week, caution prevailed ahead of US events, while the Nikkei 225 finished at ¥66,405, a modest ¥389 higher than at the end of the previous week. The initial reaction to Nvidia's earnings was firm, but the market was ultimately dominated by a wait-and-see mood ahead of the Jackson Hole meeting. Indices other than the Nikkei 225, including TOPIX and the TSE Growth Market 250, outperformed the Nikkei 225, indicating fund inflows into value stocks and small- and mid-cap stocks.
With US interest-rate trends and the release of the jobs report ahead this week, movements in Japanese and US interest rates are expected to drive the market. The 10-year Treasury yield could continue rising following the Federal Reserve chair's speech, and the Nikkei 225 is expected to move within a range of ¥5,000 on either side of ¥65,000. The market's reaction could vary depending on the US jobs report, although the data could also ease concerns about wage inflation. The release of the Beige Book and earnings trends at major US companies will also provide market cues.