Tokyo delivered a split verdict on Thursday, July 30. The Nikkei 225 climbed 0.71% to 61,867.43, snapping a two-session losing streak, powered almost entirely by semiconductor names after chip-tester Advantest raised its full-year operating profit outlook by roughly 35% on AI demand, according to reports. The broader tape told a different story: our TOPIX proxy (1306 ETF) fell 0.53%, and only 3 of 17 sectors advanced on TOPIX-17 ETF proxy data. With the Bank of Japan concluding its two-day meeting Friday and the yen at 163.61 per dollar — still pinned near multi-decade lows — the market bought the AI story and sold nearly everything else.
A Narrow, Chip-Led Rally
The leadership was unmistakable. Within our fixed 95-name large-cap universe, Advantest (6857) jumped 10.85% on 1.8x average volume, NEC (6701) gained 8.43% on 2.8x volume, Hitachi (6501) added 6.01%, and Tokyo Electron (8035) rose 4.48%. Electric & Precision was the day’s best sector proxy at +2.52% — though notably it is still down 6.7% over five sessions, so this was a rebound within a drawdown, not a fresh breakout.
The other side of the ledger was heavy. Banks were the worst sector proxy at -3.39%: MUFG (8306) lost 3.35%, Mizuho (8411) 3.62%, and Nomura (8604) led large-cap decliners at -6.52% on 1.9x volume. Autos also lagged, with Toyota (7203) down 3.04%. Fast Retailing (9983) shed 2.36%, and SoftBank Group (9984) fell 2.51% after subsidiary Arm’s sales forecasts disappointed. Sony (6758) closed flat.
| Name (code) | Close | Change |
|---|---|---|
| Advantest (6857) | 27,935 | +10.85% |
| NEC (6701) | — | +8.43% |
| Tokyo Electron (8035) | 52,240 | +4.48% |
| Nomura (8604) | — | -6.52% |
| MUFG (8306) | 3,525 | -3.35% |
| Toyota (7203) | 3,126 | -3.04% |
Rates, Yen and the BOJ Setup
JGB yields eased across the curve in the latest MOF figures (July 29): the 10-year at 2.757% (-2.6bp), the 30-year at 3.941% (-3.9bp). A no-change decision is widely priced for Friday, so attention is on the Outlook Report and any hawkish signaling about later hikes — October chatter in particular. The weakness in banks, which usually welcome higher rates, suggests positioning was being pared into the event rather than added. The overnight backdrop was mixed: the S&P 500 fell 1.52% on Wednesday’s US session, though futures ticked up 0.22% during Tokyo hours.
Positioning: Defensive, Not Panicking
Our daily signature stat: short sales were 37.1% of total TSE trading value Thursday (27.9% under the price rule plus 9.2% unrestricted), on turnover of JPY 13.49 trillion. That is elevated in absolute terms — a defensive tape — but it sits in the middle third of the last eight sessions’ 31.9%–43.8% range, slightly below the 38.2% average. Shorting pressure is persistent, not intensifying.
The rest of the positioning picture, from Wednesday’s JSF standardized-margin data (today’s not yet published):
- Squeeze costs are broad. 493 of 1,179 loanable issues — 42% — incurred gyaku-hibu premium charges, the extra daily cost short sellers pay when borrow is scarce.
- Shorts are building in the laggards. Toyota’s stock-lending balance jumped 108,300 shares on the day and Sony’s rose 63,600, while margin-loan (leveraged long) balances in both names shrank. Advantest’s stock-lending balance is essentially nil at 400 shares — nobody is standing in front of that move.
- Retail leverage is easing. JPX weekly margin buying (Tokyo+Nagoya, as of July 24) stood at JPY 6.48 trillion, down 0.23 trillion on the week, against JPY 0.73 trillion of margin selling.
On the regulatory side, JPX published 1,103 large disclosed-short-position reports across 711 issues Thursday, led by eole (16.5% of shares outstanding) and with Sanrio at 13.2%; the largest shift was Rasa Industries at +1.97pp. These are lagged position filings — a map of where shorts are camped, not a driver of today’s move. Overlaying it all, the Nikkei Volatility Index printed 39.79, its 97th percentile over the last 874 sessions. An index at record-adjacent levels with volatility this stressed is an unusual and fragile combination heading into a central bank decision.
Weekly Flows
For the week of July 21–24 (JPX investor-type data, published with a lag — these are not Thursday’s flows), foreign investors were net sellers of JPY 0.26 trillion of TSE Prime equities while individuals were net buyers of JPY 0.37 trillion — the familiar pattern of domestic retail absorbing foreign supply. One caveat: MOF’s cross-border securities data for the overlapping week (July 19–25, different reporting basis) showed foreigners net buying JPY 0.91 trillion of Japanese equities. When the two gauges disagree on direction, we would hold off on strong conclusions about the foreign bid until next week’s prints.
What to Watch
- BOJ decision and Outlook Report (Friday): the statement’s tone on normalization matters more than the widely expected hold, especially with the yen at 163.61 and banks already down 7.1% over five sessions.
- Tokyo CPI flash for July (Friday 08:30 JST): the last major input landing alongside the decision.
- Breadth: whether chip leadership broadens beyond 3-of-17 sector participation — and whether the Nikkei VI backs off its 97th-percentile reading — will tell us if Thursday’s rally has legs.
Disclaimer: This is an information and analysis publication, not investment advice. See our Methodology for data sources, standards, and our corrections policy.