The Nikkei 225 Index tilted upwards on Monday, even as top technology stocks declined. It rose by 27 basis points to 64,780, up a bit from this month’s low of 62,646. This article highlights some of the most important catalysts that will drive Japanese stocks this week.
Top Nikkei 225 companies will publish their earnings
The Nikkei 225 Index will react to several important earnings announcements this week. Kioxia, which has become one of the most actively traded companies, will publish its numbers on Friday this week.
These earnings are expected to show that its revenue soared in the first quarter as demand for its products jumped amid the AI boom. Most memory companies have recorded triple-digit returns this year, and this trend will continue for a while as memory prices jump.
More large Nikkei 225 constituent companies like Hitachi, Advantest, Komatsu, and Nomura will release their numbers on Wednesday. A day after that, Tokyo Electron, Mizuho Financial, Japan Tobacco, Takeda, Sumitomo Mitsui, and Fujitsu will release their numbers.
Finally, large companies like Mitsubishi Electric, Sumitomo Electric, Hoya, Toyota Tsusho, and Murata Manufacturing will release their numbers on Friday. Strong earnings will help to support the Nikkei 225 Index this week.
The Nikkei 225 Index will also react to the upcoming earnings dump by the biggest American companies. This includes companies in the Magnificent 7 like Microsoft, Meta Platforms, Amazon, and Apple.
These earnings normally have a big impact on global equities. For example, the Nikkei 225 Index pulled back last week after Google and Tesla published mixed financial results.
Most notably, these earnings will provide color on the AI boom and capital expenditure. A sign that these firms are accelerating their spending will benefit Japan’s suppliers like Kioxia, Murata, Tokyo Electron, and Advantest.
Key Japanese macro data
The Nikkei 225 Index will also react to key macro data from Japan. The statistics agency will publish the latest core CPI report on Tuesday. A report released on Friday last week showed that Japan’s inflation rose a bit in June this year, putting more pressure on the BoJ to act.
Japan will also release the household confidence report on Thursday and Tokyo CPI on Friday. Also, the statistics agency will release the retail sales, jobs, and industrial production report on Friday. These numbers will help the BoJ in its next meeting as the Japanese yen remains near its lowest level in years.
US and Iran war and Fed decision
The Nikkei 225 Index will also react to the situation in the Middle East, where the US and Iran paused their strikes.A continued pause will lead to lower oil prices and reduced tensions.
Crude oil prices dropped on Monday, with Brent and the West Texas Intermediate (WTI) moving to $92 and $84, respectively. Natural gas prices also continued their recent downward trend.
A continued pause and a potential return to negotiations will be bullish for Japanese stocks. That’s because it will make oil prices more affordable and reduce the inflation risk.
However, a return to intense fighting will have a negative impact on the energy market.
Another key catalyst for the Nikkei 225 Index this week will be the upcoming Federal Reserve interest rate decision on Wednesday. Economists expect the bank to leave interest rates unchanged between 3.50% and 3.75%. A sign that the bank will hike rates later this year will lead to a stronger US dollar, which will have an impact on Japan’s stocks.
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