Yen weakness, Tankan, AI and US jobs to move Tokyo stocks

The Nikkei 225 and Topix traded close to record highs last week while posting notable swings. The Nikkei ended at 69,360, down from a year-to-date peak of 72,780, and the Topix eased from 4,105 to 3,963. The yen slid to 161.75 per dollar, about 6.35% higher versus its low this year.

Market attention has focused on the Bank of Japan after an April intervention and a rate rise. In April the BOJ coordinated a roughly $73 billion intervention and raised its policy rate to 1%, the highest in about 20 years. Officials have limited additional tools and coordination with the Federal Reserve is complicated by the US election calendar. President Donald Trump has publicly expressed disappointment with Japan over its stance in the conflict with Iran.

Tokyo stocks showed sensitivity to artificial intelligence-related news. Early in the week shares of Kioxia, SoftBank Group, Tokyo Electron and Advantest fell, then rallied after stronger-than-expected results from US memory chip maker Micron. The market pared gains after Apple raised MacBook prices amid ongoing memory shortages. No major AI-focused companies are scheduled to report earnings this week, but developments in the sector could affect stock prices.

Economic data this week will include Japan’s unemployment and industrial production figures on Tuesday and the quarterly Tankan corporate sentiment survey on Wednesday. In the United States, nonfarm payrolls on Friday are forecast to show roughly 114,000 jobs added. Stronger US labor data would raise the odds of further Fed tightening and could widen Japan-US interest rate differentials, a factor that typically puts downward pressure on the yen.

Geopolitical tensions rose after the United States and Iran exchanged fire over the weekend, threatening a fragile ceasefire and supporting the prospect of higher crude prices. Any sustained rise in oil would increase global inflationary pressure and affect Japan, which imports large volumes of crude from the Middle East.

Traders in Tokyo are monitoring corporate earnings schedules, upcoming economic releases and foreign-exchange flows for signals that could influence policy expectations and stock valuations during the coming days.