Nikkei Average Rebounds on Alphabet AI Investment and Prospect of Longest Postwar Economic Expansion

Nikkei Average Rises 307 Yen, Semiconductor Stocks Bought on Alphabet's AI Investment Expansion The Tokyo stock market rebounded on the 23rd, with the Nikkei average closing at 66,422 yen, up 307 yen from the previous day. US-based Alphabet announced plans to double its capital expenditure, leading to broad buying of 'pickaxe stocks'—companies involved in semiconductor manufacturing equipment and materials—on expectations of AI data center demand. However, rising oil prices due to worsening Middle East tensions and higher interest rates also capped gains. 123

Economic Expansion Period Reaches Postwar Record 74 Months, Government Maintains Recovery Assessment in July In the July monthly economic report to be released on the 29th, the government is expected to maintain its assessment that the economy is 'recovering moderately.' The expansion phase that began in June 2020 would reach 74 months, surpassing the 73-month 'Izanami boom' from February 2002 to February 2008, making it the longest postwar expansion. However, rising prices make the recovery feel less tangible. 4

BOJ Rate Hike Expectations Strengthen, 10-Year Government Bond Yield Rises to 2.76% Japan's long-term interest rates rose on expectations of an early additional rate hike, with the 10-year government bond yield climbing to 2.76%. In the swap market, the probability of a 0.25% rate hike in October reached 80%. A Reuters survey showed that 50% of economists expect a rate hike in December and 40% in October, with the weaker yen and higher oil prices increasing inflationary pressure. 567