The Nikkei 225 fell on 18 August but had been trending higher over the previous 5 trading days. US stocks remained firm on signs of slowing inflation and a slowdown in employment indicators, while views emerged that the yen's depreciation and increased AI-related investment would boost the earnings of Japanese companies.
The Nikkei 225 fell approximately ¥1,759 from the previous day on 18 August, closing at ¥67,460.73. At the same time, it had risen for 5 consecutive days through 17 August, recovering the ¥69,000 level for the first time in a month. TOPIX also fell for a second consecutive session that day, although it had recorded 8 straight gains through 14 August.
US PPI for July rose 4.7% year on year, below market expectations, while the employment report showed nonfarm payrolls declining from the previous month. Retail sales also fell 0.6% month on month, indicating slower growth in consumption. As a result, expectations that the Federal Reserve will leave interest rates unchanged at its September meeting have become predominant, although the release of the Summary of Economic Projections could affect the market.
Regarding Japanese corporate earnings, results from approximately 970 Prime Market-listed companies with fiscal years ending in March suggest that the April-June quarter got off to a strong start, with both revenue and profit growth. Some companies are also expected to revise up their full-year net profit forecasts. The yen's depreciation, increased AI investment and the reduced impact of US tariffs have been cited as positive factors.
The rebound in AI and semiconductor-related stocks has been driving the Nikkei 225, with high-priced stocks such as Kioxia Holdings Corporation and Advantest Corporation making larger contributions to the index. Although the market appears overheated in the short term, analysis indicates that the medium- and long-term uptrend remains intact.