The Nikkei Average ended last week at ¥63,290.11, up ¥596.95 from the previous weekend. With the US midterm elections ahead, uncertainty over the situation in the Middle East is expected to prompt greater caution and a stronger wait-and-see stance this week.
The Nikkei Average ended last week at ¥63,290.11, up ¥596.95, or 1.0%, from the previous weekend. After leading with declines and then rebounding toward the middle of the week, it struggled to gain ground at the weekend. At the start of the week, rising oil prices prompted risk-averse trading, but investor reassessment of AI-related stocks advanced on developments related to US corporate IPOs.
Strong earnings reported by South Korea's SK Hynix, closer cooperation between Oracle and OpenAI, and Broadcom's financing were positive catalysts for AI-related stocks. These developments also spread to related domestic stocks.
At the weekend, AI- and semiconductor-related stocks fell sharply, led by a broad retreat. Concerns about rising long-term interest rates grew amid the expansion of Alphabet's free-cash-flow deficit and Amazon's earnings, while Intel also plunged in after-hours trading after reporting weaker-than-expected results.
The main focus this week is the US midterm elections. Market reactions are expected to differ depending on the Republican Party's seat count. If the Democratic Party retains or exceeds a majority in both the Senate and the House of Representatives, debate over curbing AI development could resurface. Immediately after the midterm elections, changes in the situation surrounding Iran could also become a source of concern. Views have been expressed that it would be prudent to remain on the sidelines immediately after the elections, in preparation for short-term rises in oil prices and long-term interest rates, along with falling share prices.