The Tokyo stock market saw the Nikkei Stock Average plunge 619 points to 59,917 on the 28th, marking a sharp reversal from the previous day. While the index had reached 60,000 for the first time on a closing basis the day before, it fell back to the 59,000 level on this day. The market's internals were completely opposite from previous days, with three stocks that had been leading the rally - ADVANTEST CORPORATION <6857>, SoftBank Group Corp. <9984>, and Tokyo Electron Limited <8035> - dragging down the Nikkei Stock Average by over 1,000 points. Meanwhile, more than 70% of stocks listed on the TSE Prime Market advanced, and TOPIX extended its gains for a third consecutive day.

Two major focal points drove the market on this day: "ADVANTEST" and "the Bank of Japan's Monetary Policy Meeting." ADVANTEST's earnings forecast for the fiscal year ending March 2027, announced after the close on the 27th, projected consecutive record profits but fell short of market expectations. In response, the stock was hit by profit-taking following its sharp surge on the 27th. However, following ADVANTEST's earnings results, a major foreign brokerage issued a report maintaining a bullish stance, noting "conservative guidance with significant upside potential." The view was that "given the company's conservative tendencies, there's no need to take the numbers at face value." Nevertheless, concerns about elevated valuations in AI and semiconductor-related stocks, which had surged sharply, remain strong. Whether the bullish stance on major semiconductor-related stocks, including ADVANTEST, will continue has become a key point of focus going forward.

Furthermore, the Bank of Japan's Monetary Policy Meeting, whose results were announced on this day, also caused ripples. While the "maintenance of current monetary policy" was as expected, three dissenting votes were cast. While the dissenting votes from Takada and Tamura were not surprising, voices from the market expressed that "the dissenting vote from Nakagawa was truly surprising." Following these three dissenting votes, views have emerged that "a rate hike in June is highly likely." However, Nakagawa's term expires on June 29th, and his successor is expected to be a member considered to be from the reflation camp. Market attention is focused on how financial markets will react based on these factors and future economic conditions.

Amid this backdrop, tomorrow is the "Showa Day" holiday and the Tokyo market will be closed. After trading on May 1st, the market will enter the Golden Week holiday period until the 6th. Meanwhile, overseas attention is particularly focused on the results of the US Federal Open Market Committee (FOMC) meeting on the 29th and US big tech earnings. While the FOMC is expected to maintain the status quo, this is also seen as potentially Powell's last FOMC as Federal Reserve Board (FRB) Chair, making his comments a focus of attention. Furthermore, hyperscalers - massive tech companies including Meta Platforms , Amazon , Microsoft , and Alphabet - will all announce earnings simultaneously. The focus is on capital expenditure trends by hyperscalers, centered on data centers (DC), and their assessment is likely to significantly shake global tech stocks, including AI and semiconductor stocks.

The market through the end of this week could mark a turning point, determining whether the concentration in AI and semiconductor-related stocks continues or whether value stocks like Mitsubishi UFJ Financial Group, Inc. <8306> stage a comeback with rate hikes in view. Tonight, the US April consumer confidence index will be released. Corning , Starbucks , and Seagate Technology Holdings will announce earnings. On the 29th, earnings announcements from Qualcomm and Ford are also scheduled.

Source: MINKABU PRESS

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