The Session: AI Capex Does the Heavy Lifting
The Nikkei 225 added 0.46% to close at 66,422.60 on Thursday, a modest gain doing a poor job of describing a sharply two-speed session. The spark was Alphabet’s raised 2026 capital expenditure guidance ($195–205 billion), which reignited the AI infrastructure trade across Asian tech. Advantest (6857) jumped 4.11%, Lasertec (6920) led our large-cap universe at +4.98%, and SoftBank Group (9984) rose 3.77%. The TOPIX-tracking 1306 ETF added 0.43%.
The yen offered no resistance to exporters — USD/JPY closed the Tokyo session at 163.40, still pinned near four-decade lows — but the bond market kept a lid on enthusiasm. Ten-year JGBs yielded 2.745% as of Wednesday’s MOF fixing (+1.4bp), with the 2-year at 1.450%, and markets are increasingly pricing a Bank of Japan hike by October, with reports suggesting the BOJ is no longer wedded to a biannual rhythm. Notably, the super-long end eased (30y -0.4bp to 3.901%), so the pressure is concentrated where policy expectations live. Add a firm commodity backdrop — Energy Resources is up 4.8% over five days — and the ceiling on this rally was visible all day. The overnight US handoff was soft too: the S&P 500 closed Wednesday at 7,498.96 (-0.14%), and futures slipped 0.35% to 7,514.00 during Tokyo hours.
| Instrument | Close (Jul 23) | Change |
|---|---|---|
| Nikkei 225 | 66,422.60 | +0.46% |
| TOPIX (1306 ETF proxy) | 422.10 | +0.43% |
| USD/JPY | 163.40 | +0.13% |
| Advantest (6857) | 30,800 | +4.11% |
| SoftBank Group (9984) | 5,918 | +3.77% |
| MUFG (8306) | 3,750 | +2.24% |
| Fast Retailing (9983) | 77,090 | -1.90% |
Sectors: Banks and Resources Lead, Domestic Demand Sold
Ten of seventeen sectors advanced, per TOPIX-17 ETF proxies (Nomura NEXT FUNDS closes, which can deviate slightly from official indices). Banks led at +2.12% — 1.69 points ahead of TOPIX — a straightforward read on rising front-end JGB yields, with MUFG up 2.24% and Mizuho also reported higher. Steel & Nonferrous (+1.93%) and Energy Resources (+1.64%, now +4.8% over five days) rode the commodity bid.
The other side of the tape was unambiguous: rate- and domestic-demand-sensitive names were sold. Real Estate fell 1.56% (down 4.3% on the week), with Mitsubishi Estate (8802) the worst large-cap decliner at -3.43% on 1.3x average volume. Foods (-1.12%, Ajinomoto -2.87%) and Retail (-0.90%, Fast Retailing -1.90%) rounded out the laggards. Within tech, the split was AI-hardware versus IT services: NEC fell 2.57% and Fujitsu 2.02% even as the chip complex rallied. Note the movers list covers our fixed universe of 95 large caps, not a full-market scan.
Positioning: A 43.2% Short-Sell Ratio Is Not a Confident Tape
Our daily signature stat: short sales were 43.2% of total TSE trading value on Thursday (32.1% under the price rule plus 11.1% unrestricted), on turnover of ¥9.21 trillion. That is the top of the last eight sessions’ range (31.9%–43.2%, average 37.8%) — elevated, and plainly defensive. Participants were leaning against this rally even as it printed green, and the Nikkei Volatility Index rising 2.23 points to 34.82 — the 93rd percentile of the past 869 sessions — says hedging demand agrees.
The stock-loan market adds squeeze texture. Per Wednesday’s JSF data (published with a one-day lag), 466 of 1,093 loanable issues carried gyaku-hibu premium charges — an extra daily cost short sellers are paying, and unusually broad at 43% of the loanable universe. Among individual names: MUFG saw stock-lending balances (shares borrowed for shorting) rise 23,100 shares while margin-loan balances — leveraged long demand — fell 181,200; shorts pressing into a bank rally driven by the rate story is a trade to monitor. In Fast Retailing the opposite: lending balances down 33,000, margin longs up 19,100, into a falling price.
Separately, Thursday’s JPX large short-position disclosures — regulatory position filings reported with a lag, not today’s selling — showed 1,156 reports across 742 issues. The most notable change was a 13.98-point reduction in disclosed shorts against the iShares 7-10 Year JGB ETF (236A), a sizable unwind of a bond-bearish position worth flagging given how central the JGB story has become. That ETF also appears on the gyaku-hibu list, so covering there carries a running cost.
Weekly Flows
The latest JPX investor-type data covers the week of July 6–10 — these are lagged weekly figures, not Thursday’s flows. Foreign investors net bought ¥0.37 trillion of TSE Prime equities while individuals net sold ¥0.64 trillion, the familiar pattern of foreigners buying strength and domestic retail distributing into it. MOF’s independent cross-border series (July 5–11, different reporting basis) confirms the direction: foreigners net bought ¥0.75 trillion of Japanese equities. Margin balances as of July 17 show retail leverage steady — margin buying at ¥6.71 trillion (-¥0.02T w/w) against margin selling of ¥0.68 trillion (-¥0.11T w/w).
What to Watch
- June national CPI, Friday 08:30 JST. With an October BOJ hike increasingly in market pricing, this is the immediate catalyst for JGB yields, the yen at 163, and by extension the banks-versus-real-estate rotation.
- Whether the 43.2% short-sell ratio resolves. With gyaku-hibu charges on 43% of loanable issues, heavy shorting into an advancing tape can fuel squeezes — or it can be the market correctly fading an AI-led bounce. Thursday’s JSF prints (out Friday) will show which way balances moved.
- Oil. Energy Resources is +4.8% over five days; a firm crude tape is a tailwind for the sector and a margin headwind for everyone else.
Disclaimer: This is an information and analysis publication, not investment advice. See our Methodology for data sources, standards, and our corrections policy.