- On Thursday, Japan's Nikkei 225 Index (NI225:JP) closed down 1.1% at 59,284.92 points, and the Topix Index (TOPIX:JP) fell 1.2% to 3,727.21 points. However, the Nikkei's gain for April still reached 16.1%, marking the largest monthly increase since October 2025.
- Geopolitical risks have marginally increased due to reports that the US may take military action against Iran to break a negotiations deadlock. This has sharply driven up international oil prices, affecting the sentiment in Japan's energy-import-dependent market.
- Earnings season has shown notable micro-level differentiation. Component manufacturers like TDK (6762:JP) and Murata Manufacturing (6981:JP), boosted by demand from data centers, reached historical highs, while IT service company Fujitsu (6702:JP) plummeted 15.2% due to disappointing earnings guidance.
Valuation Adjustments and Holiday Effects
After a strong upward movement surpassing the 60,000-point level, Japan's core equity assets faced profit-taking pressure on the last trading day of April. Naoki Fujiwara, a Senior Fund Manager at Shinkin Asset Management, noted that the potential instability in the Middle East and the dense release of corporate earnings reports prompted a wait-and-see approach. Combined with Japan's domestic holiday factors, the overall buying momentum in the market weakened. Against this backdrop, AI concept stocks, which had previously accumulated a significant valuation premium, were the first to come under pressure. Semiconductor test equipment manufacturer Advantest (6857:JP) closed down 5%, and semiconductor manufacturing equipment maker Tokyo Electron (8035:JP) also fell 1.7%, indicating that macro risk-averse sentiment is leading institutional investors to adjust their risk exposure in the tech sector.
Micro Differentiation in Earnings Season
Mixed signals from the micro-level corporate earnings side dominated the day's dramatic stock movement. Communications and IT solutions provider NEC (6701:JP) fell 7.7%, while Fujitsu (6702:JP) plummeted to its biggest one-day drop in eleven years, highlighting the cyclical fluctuations in corporate IT spending. The domestic demand sector also faced cost constraints, with Tokyo Disney Resort operator Oriental Land (4661:JP) tumbling 10.1%, warning that rising labor and repair costs would weaken operating profit for the year. However, some companies that have entered the global AI computing power supply chain showed strong resilience. Microcontroller and automotive chip manufacturer Renesas Electronics (6723:JP) surged 10.3%, reflecting sustained market pricing for edge AI and automotive electrification incremental orders.
Geopolitical Premium and Liquidity Outlook
External geopolitical variables have become critical factors disrupting the short-term pricing system of Japanese stocks. According to Axios, the US President will be briefed by the US Central Command (CENTCOM) on potential military action against Iran. This news directly increased the risk premium in the global oil market. For Japan's economy, which has a low energy self-sufficiency rate, the continuous rise in oil prices could elevate domestic inflation expectations through the path of import prices, thereby complicating the pace of monetary policy normalization by the Bank of Japan. If Middle East tensions escalate substantially, disrupting the energy supply chain, the Japanese stock market may face further valuation reassessment after the holidays, with funds potentially accelerating toward industry leaders with high profitability certainty and cost transfer capability.
