Tokyo stocks rise, Nikkei Average at 69,926, lifted by AI and semiconductors

2026-06-17

In the Tokyo stock market on the morning of the 17th, the Nikkei Average extended gains to 69,926.08 yen, up 521.58 yen from the previous day. AI- and semiconductor-related shares were bought even after U.S. tech stocks fell the previous day, and the index briefly climbed above 70,000. Buying also spread to value stocks with earnings hopes, with advancers accounting for nearly 80% of issues on the TSE Prime market.

Buying continues even after breaking 70,000

On the 16th, the Nikkei Average topped 70,000 during trading for the first time ever. After that milestone and with investors waiting ahead of tonight's U.S. Federal Open Market Committee (FOMC) meeting, trading on the morning of the 17th opened 398 yen lower from the previous day, but the tone changed sharply around 10 a.m., and the uptrend became clear.

From AI and semiconductors to laggard shares

Buying continued to center on AI and semiconductor-related stocks. Just three names - Advantest, Tokyo Electron and Lasertec - pushed the Nikkei Average up by about 334 yen. Ibiden and Disco also rose, while Murata Manufacturing at one point gained 4.6%. The ratio of gainers on the Prime market was 77%, while decliners accounted for 21%.

At the same time, the range of buying has widened. Takayuki Ishibashi, vice president at Goldman Sachs Securities, said of the market: 'The stock market is in a war-ending mode. I'm afraid of missing out on the rally.' There is also a view that the rise in oil prices has eased after the United States and Iran signed a memorandum toward ending hostilities, and that concern over a slowdown in the global economy has softened. Kazuaki Shimada, chief strategist at IwaiCosmo Securities, said that beyond semiconductors, 'buying is also entering sectors that had lagged.'

Funds flow into construction and defense

A typical example is construction stocks. Taisei Corp. rose, while Kinden at one point gained 7.32%. Taisei's forecast price-to-earnings ratio is around 16 times, below the upper 17 times range for the TSE Prime market average. Daiki Takei, a strategist at Resona Holdings, said the ceasefire agreement eased concerns over soaring construction material costs and strengthened expectations for improved earnings. In defense-related shares, which are highly sensitive to domestic policy expectations, Kawasaki Heavy Industries at one point rose 7.98%, while IHI gained 5.37%.

Still, caution remains over the speed of the rally. The Nikkei Average's positive deviation from its 200-day moving average, a gauge of the long-term trend, has exceeded 30%, well above the 20% level often seen as a sign of overbought conditions. That is the highest level since 33% in May 2013. Yasuyuki Tsuchida, senior market analyst at Rakuten Securities Economic Research Institute, said of the current market: 'The sense of higher prices ahead is strong. Going forward, the market will enter a phase in which those forward-looking expectations are measured against actual results.'

Tonight, the FOMC is due to announce its decision, and Jerome Powell, chair of the U.S. Federal Reserve Board, is scheduled to hold his first press conference this time. Markets expect policy rates to remain unchanged, but Hiroaki Nagata, who oversees stock investment at Kampo Life Insurance, said that if Powell hints at future rate hikes, funds could flow out of AI and semiconductors. In the near term, trading is likely to continue around the 70,000 level, close to record highs.

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