Nikkei Average Gains 307 Yen as Middle East Tensions Hit Semiconductor Shares

On July 23, 2026, the Tokyo stock market saw the Nikkei Average bounce back by 307 yen, according to Minkabu reporting. Although the index’s gains briefly exceeded 900 yen during the session, a wave of selling at higher levels trimmed those advances. The resulting daily candlestick formed a cross, signaling market hesitation, while the TOPIX index notched its third day of gains with three successive positive lines. Market observers noted that the somewhat long upper shadow on a high-range red three-soldier pattern served as a clear indicator of profit-taking pressure.

Alphabet Earnings and Semiconductor Stalls Amid Middle East Escalation

Market attention focused heavily on Alphabet’s financial performance for the April to June quarter of 2026, which posted earnings per share roughly four times higher than the same period a year earlier. Despite that stellar performance, Alphabet shares dipped in after-hours trading because the company raised its capital expenditure plans for the year. Even so, the aggressive investment appetite displayed by hyperscalers offered a sense of relief to the broader market. Semiconductor shares failed to maintain their early momentum, however, with Kioxia Holdings sinking after a morning rise and Advantest Corporation losing steam.

According to Minkabu, the primary driver behind the stumble in semiconductor stocks was a mounting global concern over rising interest rates. The Houthi movement, a pro-Iranian armed group based in Yemen, declared a maritime blockade of the Red Sea directed at Saudi Arabia and subsequently attacked a Saudi tanker. Compounding regional volatility, the Trump administration announced on July 22, 2026, that it had concluded an atomic power agreement with Saudi Arabia. That step toward potential nuclear development drew inevitable resistance from Iran, pushing the Middle East conflict into an increasingly chaotic trajectory with no clear resolution in sight.

Crude Oil Surge Revives U.S. Rate Hike Bets and Boosts Banking Shares

Fears over Middle Eastern crude oil supplies and shrinking inventory risks drove West Texas Intermediate front-month crude futures to $89 per barrel. One domestic securities firm warned that returning to higher price tiers would not be surprising under current conditions. That climb in oil prices stoked inflationary pressures in the United States, thereby reviving expectations for interest rate hikes. CME FedWatch data indicated that the market priced in roughly the projected probability of a 25-basis-point rate hike at the July meeting of the Federal Open Market Committee, up sharply from a significantly lower fraction a week prior.

Against the backdrop of fiscal deterioration scenarios emerging in both Japan and the United Kingdom, domestic interest rates rose in tandem. That upward movement in yields spurred a wave of new highs among banking stocks on the Tokyo exchange on July 23, 2026.

IPO Rotation and Sector Specifics on July 24, 2026

Alongside the strong performance of banking issues, market participants gravitated toward recent initial public offerings. GO, the ride-hailing taxi application, attracted heavy trading volume and hit new highs. Meanwhile, autonomous driving firm Tier IV staged a sharp recovery, surging higher on its second trading day and climbing into ninth place overall in trading volume—surpassing both SoftBank Group Corp. and Kioxia—after suffering an initial public offering debut where its opening price fell below its initial public offering price.

Looking ahead to July 24, 2026, the domestic economic calendar features the release of Japan’s June national Consumer Price Index prior to the market opening, followed by June national department store sales figures during trading hours. Corporate earnings announcements scheduled for the day include Shin-Etsu Chemical Co., Ltd. and Techno Horizon Co., Ltd., while overseas markets await the release of July manufacturing and services purchasing managers’ indexes for the euro zone and the United States, alongside U.S. new home sales data for June.