Japan's Nikkei 225 recovered to trade 0.21% higher at 64,461.68 after moving between gains and losses throughout Thursday's session. According to The Economic Times, the broader Topix advanced 0.91% to 4,118.68, showing resilience despite earlier weakness in semiconductor stocks. The recovery came as U.S. Treasury yields eased from multi-year highs overnight, with the yield on 30-year Japanese government bonds falling as much as 10 basis points on Thursday. However, investors remained cautious ahead of Japan's Ministry of Finance auction of around 600 billion yen ($3.78 billion) of 30-year government bonds later on Thursday, which could influence long-term interest rates and technology stock performance.
The Nikkei's recovery was partially offset by weakness in semiconductor-related stocks following Broadcom shares falling more than 3% in extended trading after the California-based chip and infrastructure software company forecast quarterly revenue below Wall Street expectations. As reported by Reuters, citing a note from Ryotaro Sawada, senior analyst at Tokai Tokyo Intelligence Laboratory, the weakness in Broadcom could limit gains in semiconductor-related stocks, which have been an important driver of the Nikkei. Chip-testing equipment maker Advantest fell 0.8%, while cable and optical fibre producer Fujikura declined 2.79%. However, memory chipmaker Kioxia gained 0.67%, and semiconductor equipment maker Tokyo Electron rose 0.81%. The mixed performance in chip and AI-related stocks reflected investor caution amid broader market uncertainty.
A stronger yen pressured export-focused companies by reducing the value of overseas earnings and making Japanese assets more expensive for foreign investors. According to Business Standard, the yen's strength weighed particularly heavily on companies with significant overseas operations, as it made their products less competitive in international markets. Inpex, Japan's leading oil and gas explorer, fell 3.43%, while Fast Retailing, the parent of Uniqlo, declined 3.58%. The energy sector remained the weakest performer among the Tokyo Stock Exchange's 33 sector sub-indexes, with Japan's energy explorer sector dropping 2.57%.
Financial stocks performed better than the broader market, with Mitsubishi UFJ rising 1.9%, Sumitomo Mitsui gaining 1.7% and Mizuho Financial adding 0.7%. As reported by Business Standard, this outperformance provided some support to the overall market despite the weakness in export-focused sectors. The financial sector's resilience came as investors assessed the outlook for inflation and interest rates, with global bond yields easing from recent highs. Ibiden Co dropped 2.4% among individual stocks, reflecting the mixed performance across different sectors.
Global equity markets traded mostly lower at the start of the week as Federal Reserve Chair Kevin Warsh's hawkish remarks reinforced expectations of another US interest rate hike. According to reports from Anadolu Agency, Warsh signaled at the Jackson Hole Economic Symposium that additional policy measures may be needed if inflation fails to ease toward the Fed's target. Money markets raised the probability of a Fed rate hike in September to around 60%, with the US two-year Treasury yield rising to 4.35% from 4.22% shortly before Warsh's speech. The benchmark 10-year Treasury yield climbed five basis points to 4.73% before trading at around 4.71% at the start of the week. Wall Street closed lower at the end of last week after Warsh's speech, with the Dow Jones Industrial Average slipping 0.02%, the S&P 500 falling 0.25% and the Nasdaq declining 0.52% on Aug. 28.
In the domestic market, frontline indices remained under pressure throughout the session with buying momentum failing to sustain. As reported by Live Mint, the Nifty 50 settled 0.39% lower at 24,080, while the Sensex lost 0.40% to close at 76,957. The weakness dragged down benchmarks' monthly performance, with both indices wrapping up August with losses of more than 1.40%, snapping their two-month winning run. The broader markets remained mixed, with the Nifty Midcap 100 gaining 0.24%, while the Nifty Smallcap 100 fell sharply by 0.74%. European equities were supported by strong corporate earnings at the end of last week, while attention is turning to the European Central Bank's upcoming monetary policy decision amid growing macroeconomic concerns. The eurozone economic sentiment indicator rose 1.3 points month-on-month to 98.4 in August, while minutes from the ECB's latest meeting signaled the possibility of a rate hike next month.
