The Tokyo stock market saw the Nikkei Stock Average fall 1,024 yen on the 17th, erasing the previous day's gains. After surging 1,384 yen to 59,518 yen on the 16th?surpassing the record high of 58,850 yen set on February 27th for the first time in a month and a half?profit-taking intensified. The Nikkei's 8% upward deviation from its 25-day moving average fueled overheating concerns, as a deviation exceeding 5% is generally viewed as overbought.

Until recently, financial markets were dominated by concerns over a Middle East crisis, but focus has shifted back to the concentrated rally in AI and semiconductor stocks. Regarding the Iran situation, with the two-week ceasefire set to expire mid-next week, speculation has emerged of a possible two-week extension. Any new developments over the weekend will be closely watched. If fighting resumes, markets could face renewed turbulence.

However, market observers note that "the Middle East issue has pivoted from combat to negotiation," with expectations growing that tensions have peaked. If developments align with market expectations, the focus will remain on high-growth tech stocks. Benefiting from this trend in Japan are AI and semiconductor-related stocks such as ADVANTEST CORPORATION <6857> and SoftBank Group Corp. <9984>, with the Nikkei leading among indices. The Nikkei has risen approximately 15% in April, outperforming the TOPIX’s 8% gain. The NT ratio approached 15.6, nearing its historical peak seen last fall.

The TOPIX, with its larger weighting in domestic demand stocks, is more vulnerable to rising oil prices. For this reason, the concentrated rally in AI and semiconductor-related stocks is expected to continue. For instance, Kioxia Holdings, which has generated daily trading volumes of 1 trillion yen and become a market centerpiece, expects a consolidated net profit of up to 513.7 billion yen for the fiscal year ending March 2026, up 88.7% from the previous year. Market speculation suggests net profit could expand to around 2 trillion yen for the fiscal year ending March 2027. This rapid growth outlook underpins strong investor appetite.

Next week, earnings season begins in earnest with DISCO CORPORATION <6146> scheduled to report on the 22nd. Results from ADVANTEST on the 27th, TOYOTA MOTOR CORPORATION <7203> on May 8th, SoftBank on the 13th, and Kioxia on the 15th will be closely monitored.

Other events scheduled for next week include: on the 21st, US March retail sales and US March pending home sales; on the 23rd, US April S&P Global Manufacturing PMI; and on the 24th, Germany's April Ifo Business Climate Index. Earnings reports are due from UnitedHealth on the 21st; Boeing , Tesla , and Texas Instruments on the 22nd; American Express , Intel , and Newmont on the 23rd; and Procter & Gamble on the 24th.

Domestically, data releases include: March Tokyo-area new condominium sales on the 20th; March trade statistics on the 22nd; April S&P Global Japan Manufacturing PMI on the 23rd; and March Consumer Price Index (CPI) on the 24th. Earnings announcements are scheduled from OBIC Co.,Ltd. <4684> and BRONCO BILLY Co.,LTD. <3091> on the 21st; Canon Marketing Japan Inc. <8060> on the 22nd; CANON INC. <7751> and SHIMANO INC. <7309> on the 23rd; and KEYENCE CORPORATION <6861>, FANUC CORPORATION <6954>, Nomura Holdings, Inc. <8604>, and Renesas Electronics Corporation <6723> on the 24th. The Nikkei Stock Average is expected to trade in a range of 57,300 yen to 59,500 yen next week. (Hideyuki Okazato)

Source: MINKABU PRESS

*Translated by generative AI. Click here for the original article.