Buying in anticipation of a technical rebound is expected to lead trading in Japan's stock market on the 16th, but market supply and demand are expected to make selling into a rebound more likely as investors assess the direction of semiconductor stocks.
The Nikkei average is likely to trade while taking its cue from the previous day's US market, with investors assessing whether semiconductor stocks have bottomed. Nikkei futures at times recovered to the previous day's level in overnight trading, but weakness in US semiconductor-related stocks, including the SOX Index's 7-day losing streak, could affect the broader market.
Buying of domestic government bonds has increased as US long-term interest rates decline, while the yen is trading in the ¥158-per-dollar range. As a result, intraday market supply and demand are expected to track Chicago futures.
Following the negative factors through the previous day, stocks with significant exposure to semiconductors and AI are likely to determine the direction of the indices. Advantest, Kioxia Holdings, SoftBank Group and Tokyo Electron are among the stocks in focus, and individual results announcements could provide additional trading cues.
Overall, investors are expected to remain mindful of a technical rebound in semiconductors, while supply and demand is likely to shift toward domestic-demand and defensive stocks. Selling into a rebound is also expected in some situations. The performance of companies announcing results is highly likely to be the market's focus.