Japanese stocks are set to fall, led by tech shares, after strong US jobs data fueled expectations that the Federal Reserve will keep rates higher for longer, sparking a selloff in AI-related shares on Wall Street.
Stocks are also set to come under pressure after Iran fired several rounds of missiles toward Israel, as the US pushed to preserve a faltering ceasefire.
Nikkei 225 Stock Average futures expiring in September were at 63,865.00 on the Chicago Mercantile Exchange as of 7:46 a.m. Tokyo time, compared with 66,588.12 for Friday’s close for the underlying gauge.
“Japanese stocks are likely to open sharply lower as investors increasingly price in the risk of a US interest-rate hike, dampening sentiment,” said Shoji Hirakawa, chief global strategist at Tokai Tokyo Intelligence Lab. “Selling is expected to spread across Japanese technology shares, while funds may rotate into defensive sectors such as pharmaceuticals, food and telecommunications.”
Technology and AI-related stocks, including SoftBank Group Corp. and Kioxia Holdings Corp., which reached record highs earlier this month, are likely to come under pressure after the Nasdaq 100 dropped about 5% and the Philadelphia Semiconductor Index slid 10% on Friday. Sentiment was further dented after US job growth exceeded all forecasts in May, reinforcing expectations that the Fed may need to keep monetary policy restrictive for longer to contain inflation.
Concerns had already been mounting over lofty technology-stock valuations and the sustainability of the AI-fueled rally in the US and Asia. Japanese companies have also benefited from the boom, though to a lesser extent than their South Korean peers, with memory-chip maker Kioxia soaring more than 600% this year through Friday and SoftBank climbing nearly 70%.
Traders are also increasing bets on a Bank of Japan rate hike when policymakers meet next week, as officials grapple with mounting upside risks to inflation.
Investor sentiment is also likely to be weighed by escalating tensions in the Middle East after Iran launched multiple waves of missiles toward Israel. The Israel Defense Forces warned that additional barrages could follow, though it said all incoming missiles were intercepted or landed in open areas.
This article was generated from an automated news agency feed without modifications to text.
