Tokyo stocks seen rebounding on Sept. 3, but upside limited amid persistent crude oil concerns

The Nikkei Stock Average is expected to rebound on Wednesday in Tokyo. On the previous day, European stock markets posted broad losses, with Germany's DAX, France's CAC 40, and Britain's FTSE 100 all finishing lower, while other regional markets also declined. In contrast, U.S. markets gained, with the Dow Jones Industrial Average, the Nasdaq Composite, and other major indexes rising. The Philadelphia Semiconductor Index (SOX) also rebounded.

Although risk-off sentiment continued across Asian and European markets, including Japan, the trend paused in the U.S. session. Buying, largely driven by expectations of a technical rebound following a string of declines, flowed into major stocks. However, investors showed little appetite to aggressively chase gains, with major indexes and SOX all posting modest gains of under 1%.

In U.S. commodity markets on the same day, WTI front-month futures settled at $91.01 a barrel, up $0.79 from the previous session - the highest level since late July. Crude oil prices resumed an upward trend amid growing instability in the Strait of Hormuz due to escalating U.S.-Iran tensions, keeping market concerns elevated.

Against this backdrop, the Tokyo market is expected to stage a technical rebound on Wednesday. Given that the Nikkei Average fell more than 1,800 points the previous day, a corrective bounce is likely. However, inflation concerns stemming from rising oil prices are expected to weigh on sentiment, and the market will likely lose momentum after initial buying.

On the 2nd, the Dow Jones Industrial Average rose $295.07 from the previous session to close at $53,061.95, rebounding for the first time in four sessions. The Nasdaq Composite gained 118.05 points to finish at 26,217.82.

On the domestic calendar today: weekly data on foreign and domestic securities transactions, and an auction of 30-year JGBs. Overseas, August services PMI figures are scheduled for release in China (RatingDog), Germany, the eurozone, and the U.S. In the U.S., July trade balance figures, weekly initial jobless claims, the August ISM Non-Manufacturing Index, and the final reading of April-June non-farm labor productivity are also due.

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