News & Insights

In October 2026, the Japanese equity market weakened, with the TOPIX falling 3.5% and the Nikkei 225 declining 5.2%, as rising oil prices, concerns over the sustainability of AI investment, and weaker sentiment towards global technology stocks weighed on markets. AI and semiconductor-related shares led the decline following credit concerns surrounding U.S. AI cloud providers and growing questions over the profitability of AI investment.

In September, Japanese equities delivered mixed performance amid rising geopolitical tensions in the Middle East, higher global bond yields and evolving monetary policy expectations. The Nikkei 225 outperformed, gaining 0.7%, while the broader TOPIX declined 1.1%, supported by a recovery in AI and semiconductor-related stocks despite weakness across much of the market. Early-month sentiment weakened as escalating regional conflict drove oil prices higher, inflation concerns intensified and the yen strengthened. Markets subsequently recovered as AI-related shares rebounded and pressure from energy prices and currency movements eased, before trading largely sideways towards month-end.

In August, Japanese equities advanced as the TOPIX rose 3.8%, marking a fifth consecutive monthly gain, while the Nikkei 225 increased 3.0%, supported by strong domestic corporate earnings and easing concerns over excessive AI investment following US technology sector results. Semiconductor and AI-related stocks rebounded after July's sharp correction, while softer US economic data reduced expectations of near-term Federal Reserve tightening and further supported sentiment.

[External Link] Katsunori Ogawa, Chief Portfolio Manager for Sakigake High Alpha at SuMi TRUST AM, shared his views with WealthBriefing on the long-term outlook for AI investment, highlighting that infrastructure capacity, energy efficiency, and power management are likely to become increasingly important as AI adoption accelerates.

[External Link] Kei Fujimoto, Senior Economist at SuMi TRUST AM, shared his views with the media on the Bank of Japan's policy outlook, highlighting the potential for a faster pace of monetary tightening amid stronger economic growth and rising import-price inflation.

In July, Japanese equities delivered mixed performance as the TOPIX rose 0.2%, marking a fourth consecutive monthly gain and closing above 4,000 points for the first time, while the Nikkei 225 fell 8.1% amid a sharp sell-off in AI and semiconductor stocks. Concerns over excessive AI investment by US hyperscalers, intensifying competition from Chinese firms, and profit-taking following earlier gains weighed on sentiment, although buying in undervalued and cyclical sectors helped support the broader market.