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Friday, July 31, 2026
What’s happening: Japanese stocks traded sharply higher this morning, extending gains from the previous session.
What happened: A global surge in semiconductor shares and renewed optimism around AI provided a boost to the overall market sentiment.
Investors also digested the latest economic reports from Japan released this morning.
Why it matters: Investor sentiment was driven by better-than-expected results from Microsoft, which sent the tech giant’s shares higher by more than 15% on Thursday, reinforcing market confidence in sustained AI-related demand.
In Japan, Advantest’s stock climbed around 18% this morning after the company raised its full-year operating profit outlook by 35% to reflect strong demand for AI-related equipment. Shares of other key tech gainers, like SoftBank, Tokyo Electron, Fujikura and Lasertec also rose.
Data released this morning showed Japan’s industrial production surged 1.3% in June, accelerating from a 0.1% gain in the previous month. The figure also surpassed market estimates of 0.7%. It signalled the third straight month of growth and was the strongest since January, indicating a continuous rebound in manufacturing activity amid some easing in supply chain disruptions.
Retail sales in Japan climbed 0.5% year-over-year in June, compared to the previous month’s 5.0%. Although this was a deceleration, it marked fourth consecutive month of growth.
Japan’s unemployment rate came in unchanged for the third straight month at 2.5% in June, in-line with market estimates, remaining at its lowest reading since July 2025.
Core consumer prices in Tokyo rose 1.9% year-over-year in July, compared to a 1.6% gain in the previous month and higher than market estimates of 1.7%.
Japan’s Nikkei 225 jumped 5.1% to trade at 65,014.88 this morning.
Meanwhile, the USD/JPY forex pair rose 0.7% to 160.59 this morning. The yen has earlier strengthened to around 158 versus the greenback but pulled back later, as markets again suspected intervention by Japanese authorities to provide support to the currency before the release of the Bank of Japan’s monetary policy decision.
The Japanese currency had tumbled to a 40-year low earlier this month due to rising concerns over higher energy costs and wide rate differentials.
What to watch: Investors will keep an eye on the latest developments related to the US-Iran conflict.
Data on S&P Global Manufacturing PMI (0430 UAE Time) from Japan will be released on Monday. Analysts expect the S&P Global manufacturing PMI to decline to 54.7 in July from 54.8 in the previous month to record the seventh consecutive month of growth in factory activity.
Context: While Apple’s shares fell in after-hours trading, Amazon’s stock rose sharply with both companies reporting upbeat quarterly earnings.
Details: Amazon reported revenues of $200.61 billion for the second quarter, up 20% year-over-year, topping consensus estimates of $196.46 billion. Earnings came in at $5.75 per share, surpassing Wall Street expectations of $1.82 per share.
Amazon recorded its strongest cloud growth in over four years and raises its capital spending outlook for the year. Revenue at the company’s cloud computing segment, Amazon Web Services, surged 37% to $42.2 billion in the quarter, topping market estimates of a 31.2% gain.
Amazon guided to third-quarter revenues of $197-$202 billion, compared to market estimates of $204.08 billion.
Meanwhile, Apple’s revenues rose 16% year-over-year to $109.42 billion for its fiscal third quarter, higher than consensus estimates of $108.65 billion. The company’s earnings came in at $2.02 per share, topping market expectations of $1.89 per share.
Apple said iPhone sales jumped to $54.25 billion in the latest quarter, from $44.58 billion in the year-ago period. This marked the company’s best-ever third-quarter sales for iPhones. Mac sales climbed to $10.35 billion from $8.05 billion last year.
The company’s guidance disappointed investors, with revenue growth projected at 9%-11% year-over-year for the current quarter, lower than market estimates of 12%.
How shares responded: Amazon’s stock jumped 9.6% to $258.00 in after-hours trading on Thursday, while Apple’s shares fell 6.3% to $312.33.
What to watch: Investors will keep an eye on rising AI-related demand, which is expected to impact the performance of both companies going ahead.
Other Markets: European indices closed mostly higher on Thursday, with the DAX 40, CAC 40 and STOXX Europe 600 Index up by 0.60%, 0.92% and 0.77%, respectively, and the FTSE 100 down by 0.10%.
Poland blamed Russia for firing missile in a field in the eastern region of its country as Moscow continues deadly attacks on Ukraine. The news sent the USD/RUB pair higher in forex trading this morning.
Australia’s final demand producer price index climbed 1.3% in the second quarter. This being a significant acceleration from the previous quarter’s 0.4% exerted pressure on the AUD/USD forex pair.
China’s official NBS manufacturing PMI fell to 49.2 in July from 50.3 in June and missed market estimates of 50.0. This being the first contraction in factory activity since February sent the USD/CNY pair higher in forex trading this morning.
New Zealand’s ANZ-Roy Morgan consumer confidence index rose by 8 points to a reading of 99.3 in July. Although the index surged to the highest since February, it remained 19 points below its January highs, which exerted pressure on the NZD/USD forex pair.
Singapore’s bank loans rose to a new record high of S$931.4 billion in June from S$917.7 billion in May. However, the USD/SGD pair rose in forex trading this morning.
Italy’s Business Confidence (1200 UAE Time), Consumer Confidence (1200 UAE Time) and Inflation Rate (1300 UAE Time), Spain’s Current Account (1200 UAE Time), Eurozone’s Inflation Rate (1300 UAE Time), India’s Foreign Exchange Reserves (1530 UAE Time), Canada’s GDP (1630 UAE Time) and Budget Balance (1900 UAE Time) as well as US Employment Cost Index (1630 UAE Time), Chicago PMI (1745 UAE Time), Michigan Consumer Sentiment (1800 UAE Time), Michigan Consumer Expectations (1800 UAE Time), Michigan Inflation Expectations (1800 UAE Time), Baker Hughes Oil Rig Count (2100 UAE Time) and Baker Hughes Total Rigs Count (2100 UAE Time).
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