Nikkei extends gains on US inflation data, led by AI and chip stocks

2026-08-13

In Tokyo trading on the 13th, the Nikkei Stock Average rose for a second straight session, closing the morning session up 1,085 yen from the previous day at 68,609. At one point, the index climbed more than 1,200 yen and briefly returned to the 68,000 level intraday for the first time in about a month. The US price data, which matched market expectations, eased speculation that rates would be raised soon. A rally in US technology shares the previous day also provided support, prompting buying back into AI and semiconductor stocks that had been under pressure since late June.

US CPI eases rate-hike concerns

In the US stock market on the 12th, both the Nasdaq Composite, which has a high weighting of technology shares, and the Philadelphia Semiconductor Index, or SOX, which is made up of major chip-related names, advanced. The market was supported by the US consumer price index for July, released on the 12th. It rose 3.4% from a year earlier, matching market expectations and slowing from June's 3.5% increase. The pace of oil price gains also paused, easing inflation concerns somewhat.

In FedWatch, which reads monetary policy from US interest rate futures, the probability that the Federal Open Market Committee would keep policy rates unchanged at its September meeting rose. The July US employment report also pointed to a softening labor market, reinforcing the view that the Federal Reserve is not in a phase where it needs to rush to raise rates.

Kohei Onishi, senior investment strategist at Mitsubishi UFJ Morgan Stanley Securities, said the slightly weaker US jobs report and the US CPI in line with market expectations fed expectations for a comfortable 'Goldilocks' economy, which in turn drove stock buying.

Funds return to AI and semiconductors

A cooling of overly aggressive rate-hike expectations in Japan and overseas also encouraged buying, as the valuation premium on high-priced technology stocks narrowed. In Tokyo trading on the 13th, Advantest at one point rose 7%, while Kioxia Holdings, Ibiden and Taiyo Yuden also gained to around 10%. A firm showing by South Korea's KOSPI and Taiwan's weighted index also provided support.

In Japan, earnings reports for listed companies for the April-June period of fiscal 2026 have now largely been released, and the overall reception has been positive. In addition to AI and semiconductor-related shares expected to benefit from data center investment, machinery and gaming stocks, which had been largely out of favor so far this year, also featured a number of companies that delivered unexpectedly strong results, market participants said.

TOPPAN Holdings announced a sharp rise in sales and profit for the April-June period of fiscal 2026 on the 12th, and was bought up to the daily upper limit on the 13th. The market also reacted favorably to gains from the acquisition of a major US packaging company and to growth in package substrates for advanced semiconductors. Mitsubishi Heavy Industries, which on the 4th reported April-June fiscal 2026 results that exceeded market expectations for both sales and profit growth, also saw continued attempts at a rebound. Game-related stocks were prominent decliners on the 13th, but Nintendo and Bandai Namco Holdings attracted buying on the back of strong earnings.

Improving earnings underpin the market

Nomura Securities' revision index, which tracks major companies, stood at plus 35.6 for the current fiscal year as of the 6th, excluding financials, up from plus 29.7 the previous week and the highest on a current-year basis. A positive reading indicates that upward revisions outnumber downward revisions.

Forecasts for recurring profit growth at major companies, excluding financials, also improved to 18.9% growth for the current fiscal year, up from 13.9% the previous week. At the start of the fiscal year, worsening conditions in the Middle East were a drag, but earnings per share are now on an expansion trend, drawing money from investors who focus on fundamentals.

Tetsushi Wakayama, senior fund manager at Tokio Marine Asset Management, said stock price volatility is still likely to remain high. He said this is not a phase for aggressive buying from a risk-management standpoint, but he is keeping in mind a shift of funds toward undervalued stocks with strong earnings. The Nikkei average is again testing higher levels as it moves toward a return to the 70,000 range.

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