EBC Markets Briefing | Nikkei 225 slips amid chip stock profit-taking

Heavy borrowing plans by top tech firms added pressure to sovereign bond markets, causing Japanese shares to fall on Thursday as investors braced for tighter funding competition.

Crude oil volatility has emerged as the premier risk facing Japanese corporations, surpassing currency swings and escalating borrowing costs, according to a new Reuters survey.

For the second half of the fiscal year, more companies are bearish than bullish about their financial outlooks, partly due to uncertainties about the sustainability of AI-related investment.

Japan's private sector maintained its expansionary path for an 18th consecutive month in September, though overall momentum slowed to its lowest level since May.

Booming stocks and surging bond yields are drawing global asset allocators back, sparking strong expectations for a major influx of foreign capital.

However, the Nikkei 225 Index heavily relies on a narrow cluster of semiconductor-related heavyweights, making it vulnerable to sharp reversals if global AI spending slows down.

EBC Financial Group analyst says the index displayed a tower top pattern. Buyers are expected to return at the current support level, so a rebound may be on the horizon.

Asset Recap

As of market close on 7 October, among EBC major products, Micron Technology shares led gain as investors appear to brush off fears of a possible strike at one of the company's key manufacturing sites in Taiwan.

Iren shares fell following a series of critical social media posts from research firm SemiAnalysis, which reported severe user complaints regarding the infrastructure quality at the Bitcoin miner-turned-neocloud's data centre facilities.

Gold prices declined as the US dollar strengthened and investors awaited minutes from the Fed's September policy meeting for further indications about the outlook for interest rates.

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EBC Financial Group Disclaimer: This material is for general information purposes only and is not intended as (and should not be considered to be) financial, investment or other advice on which reliance should be placed. No opinion given in the material constitutes a recommendation by EBC Global Financial Collaboration or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person.