This week brought notable moves across Japanese, U.S., and currency markets, shaped by shifting expectations around policy, AI-related volatility, and safe‑haven flows.
Below is a concise overview designed for international investors following Japan’s market dynamics.
Japan: Post‑Election Stability Supports Equities
Japan’s equity market remained firm, supported by expectations of policy stability following the recent lower‑house election.
The Nikkei continued to trade near its highs, driven by what local investors call the “Takaichi trade”—a rotation into Japanese equities on hopes of consistent economic policy and structural reforms.
Foreign inflows also remained steady, reflecting renewed interest in Japan as a relatively undervalued and stable market within Asia.
United States: AI Volatility and Softening Demand
U.S. markets lacked clear direction this week.
AI‑related stocks experienced sharp swings, and concerns around softening consumer demand kept broader indices in a cautious mood.
Interest‑rate expectations remain fluid, with investors watching inflation data and Fed commentary closely.
For global markets, AI sentiment and rate expectations continue to be the dominant drivers.
💱 FX Market: Yen Strengthens Across Major Currencies
The yen strengthened against major currencies including the USD and EUR.
Safe‑haven demand and shifting rate expectations contributed to the move, pushing USDJPY and EURJPY lower.
For international investors, this matters because Japanese equities are effectively a currency‑exposed asset class.
Yen appreciation can offset equity gains, while yen weakness can amplify them.
👀 How Japanese Retail Investors See the Market
Domestic investors are currently focused on three themes:
- How far the yen’s strength will extend
- Whether inflows into Japanese equities will continue
- How U.S. AI volatility might spill over into Japan
Interestingly, despite the stronger yen, buying interest in Japanese equities remains firm, reflecting confidence in corporate reforms and earnings resilience.
🔎 What to Watch Next Week
1. AI‑Driven Volatility in U.S. Markets
AI stocks continue to dictate market sentiment.
Any shift in rate expectations or tech earnings could influence global risk appetite.
2. Yen Strength and Equity Inflows in Japan
Will the yen continue to appreciate
And will domestic・foreign investors keep allocating to Japanese equities despite currency headwinds
These two factors are likely to shape next week’s tone across global markets.
📝 Summary
- Japan: Post‑election stability supported equities
- U.S.: AI volatility and soft demand kept markets cautious
- FX: Yen strengthened as safe‑haven flows increased
- Next week: Watch AI sentiment and yen‑driven positioning
Japan remains a compelling market for global investors—supported by policy stability, improving corporate governance, and renewed foreign interest.
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