[October 21] Today's Stock Market Report: Nikkei Average rebounds for the first time in 3 days, closing up 545 yen despite losing steam in the afternoon after a temporary 1,329 …

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The shock of SpaceX’s “Neo Cloud profitability” and the first “3 consecutive days below 7 trillion yen” since April; assessing the situation before Meta’s earnings tonight. No blind spots in the AI bubble.

• Nikkei Stock Average Closing Price : 64,621.24 yen (+545.82 (+0.85%))

• TOPIX : 4,043.73 points (+34.52 (+0.86%))

• Trading Value (TSE Prime) : 6.926569 trillion yen

• Number of advancing stocks: 982 / Number of declining stocks: 521 / Unchanged stocks:50

• External market environment: US SOX index rebounds but credit anxiety remains regarding US emerging AI clouds, WTI crude oil rises again, oil prices high due to Middle East situation

• Notes: Ibiden and Tokyo Electron are high. Fujikura and Murata Manufacturing rose. Tokio Marine and Chugai Pharmaceutical were bought. On the other hand, KDDI and Fast Retailing are low. Nitori HD, Kao, and OLC fell.

1. Market Close: Rocket start with a temporary 1,329 yen gain followed by a stall, thin trading with 3 consecutive days below 7 trillion yen

The Tokyo stock market on Wednesday, October 21, 2026, followed the trend of major stock indices rising, led by the NY Dow, in the US market the previous day, and buying was dominant across a wide range of stocks from the opening. In particular, the earnings of US space development giant SpaceX revealed that the AI data center lending business (Neo Cloud business) it operates has achieved profitability, and with the confirmation of strong performance in data center components in the earnings of US materials giant 3M, excessive distrust regarding the profitability of the AI/semiconductor supply chain receded. The Nikkei Stock Average surged 1,329 yen from the previous day in just 30 minutes from the opening, easily recapturing the 65,000 yen level and climbing to around 65,400 yen, which was today’s high. However, the momentum of the sharp rebound did not last after the middle of the morning session. The remnants of credit anxiety regarding emerging AI cloud companies (such as US-based CoreWeave) that have been shaking the market recently have not completely disappeared, and in line with the
stalling of the South Korean stock market (KOSPI) toward the end of the morning session, the Nikkei also reduced its gains. Although it managed to maintain the battle around the 65,000 yen mark in the morning session, it lowered its level further in the afternoon session, and struggled to grow as there were no additional materials to buy into even after 2:00 PM when European investors joined. Nevertheless, dip buying supported the market toward the close, and it finished the day with a rebound for the first time in 3 business days, maintaining a gain of over 500 yen. The closing price of the Nikkei Stock Average was 64,621.24 yen, up 545.82 yen from the previous business day (plus: 0.85%), rebounding for the first time in 3 business days. On the other hand, TOPIX (Tokyo Stock Price Index), which is composed of a wide range of stocks on the TSE Prime market, also moved firmly in line with the Nikkei. The closing price recorded

4,043.73 points, up 34.52 points from the previous business day (plus: 0.86%), which also rebounded and solidified the 4,000-point mark. The trading value on the TSE Prime market remained at 6.926569 trillion yen

(estimated trading volume of 2.17903 billion shares). Following the previous day (6.79 trillion yen) and the day before (6.78 trillion yen), it was extremely thin trading, “falling below the 7 trillion yen mark for 3 consecutive business days.” Falling below 7 trillion yen for 3 consecutive days is an abnormally low level for the first time in about half a year since April 7 of this year. With the earnings announcement of US Meta Platforms (Meta), which holds the fate of global AI investment trends, coming up tonight, and the concentration of monetary policy meetings by the three major central banks of Japan, the US, and Europe next week, large institutional investors refrained from active trading, resulting in a complete “vacuum zone waiting for materials”. Looking at the internal structure of the market, against the backdrop of progress in Neo Cloud monetization, AI semiconductor and data center-related stocks such as Ibiden, Kioxia Holdings, and major wire manufacturers Fujikura and Furukawa Electric were bought back, leading the market’s rise. Also, despite the fact that domestic market interest rates are currently falling, financial sectors such as mega-banks, insurance, and securities were generally bought in anticipation of the “Bank of Japan’s additional interest rate hike scenario toward the end of the year.” On the other hand, triggered by reports of Volkswagen (VW) of Germany “freezing wage increases for employees until 2030,” associations with global sluggish automobile sales

were triggered, leading to selling of Toyota Motor and Nissan Motor, and drug store companies were also hit by simultaneous selling for no reason, highlighting a day with an unstable market environment easily swayed by external noise and individual speculation.

2. Mechanism of market rebound and afternoon stall: Surprise of SpaceX’s “Neo Cloud profitability” and the stall linked to the Korean market

Why did the Nikkei Stock Average jump more than 1,300 yen in just 30 minutes from the opening in the morning, only to lose more than half of its gains by the afternoon? I will explain the mechanism of market fluctuation.

① The truth revealed by SpaceX: The true identity of the “profitable Neo Cloud” that surpasses CoreWeave

Immediately after the opening today, the biggest catalyst that triggered a strong buyback in the Tokyo stock market was the earnings content of space development giant SpaceX that was reported after the US market closed.

In the general perception of the market, SpaceX was regarded as a space infrastructure company engaged in the “rocket launch business” and the satellite communication network “Starlink”.

However, through this disclosure, it was revealed that the company has built a massive number of its own data centers across the U.S. and globally to operate its Starlink network and AI autonomously, and is deploying a “Neo-Cloud business” on a large scale by leasing that computing power to external AI companies and cloud providers.

Moreover, it was discovered that the scale of its data center assets far exceeds that of the U.S.-based CoreWeave, which had recently been at the epicenter of credit concerns due to a sharp drop in its corporate bonds.

Furthermore, what surprised the market was its profitability. While many emerging cloud providers were seen as struggling with massive deficits due to huge investments, it was shown that SpaceX’s data center leasing division is “already generating a clear operating profit.”

In response to the market’s skepticism that “investments in AI data centers might not be recoverable,” this was the moment when irrefutable evidence was presented that “for companies with the appropriate scale and infrastructure, the data center business is already a highly profitable business generating enormous cash.”

② U.S. 3M’s strong earnings prove “tangible profits from peripheral components”

Correspondingly, in the earnings report released by U.S. diversified materials giant 3M, it was confirmed that sales and profits for advanced components used in AI data centers—such as thermal management materials, adhesive and bonding materials, and high-performance electrical insulation materials—are expanding rapidly.

With major U.S. companies like SpaceX and 3M proving the reality that “they are actually making money in businesses surrounding AI data centers,” a wave of reversal buying (short covering) flowed into semiconductor and component manufacturers in the Tokyo market, which had been sold off in a panic until the previous day, starting from the opening bell.

③ Why did it lose steam in the afternoon? (The pullback of the Korean KOSPI and holding back before Meta)

However, the momentum that had driven the Nikkei up by as much as 1,329 yen in the morning session slowed rapidly toward the afternoon.

The first factor that broke the market’s momentum was the high degree of correlation in Asian markets. The South Korean stock market (KOSPI), which had been bought strongly in the morning, hit a high before noon and then lost steam under pressure from profit-taking. In step with this, profit-taking selling also began to emerge in Nikkei 225 futures in the Tokyo market.

Furthermore, the attention of market participants was already completely fixed on “the earnings report of U.S.-based Meta Platforms to be announced tonight.”

A cautious stance spread among institutional investors, who felt that “until we see Meta’s earnings, it is too risky to aggressively buy further upside from here.” With no new buyers in the afternoon, the Nikkei Average was forced into a sluggish development, with its gains shrinking to the 400-yen range at one point.

3. “Below 7 trillion yen for 3 consecutive days” since April: Trading volume returns to levels before Kioxia’s inclusion, and assessment before Meta’s earnings

Today’s trading value on the Tokyo Stock Exchange Prime Market remained at 6.9265 trillion yen, marking the “third consecutive business day falling below the 7 trillion yen threshold,” following Monday (6.78 trillion yen) and Tuesday (6.79 trillion yen), an extremely unusual low level.
I will consider the historical significance of this data, “below 7 trillion yen for 3 consecutive days,” by comparing it with past market data.

Going back in time, the last time trading value fell below 7 trillion yen for three consecutive days was since “April 7, 2026,” about half a year ago.
This timing, April 7, is important. Kioxia Holdings was newly included in the Nikkei Stock Average on April 1. This perfectly matches the “bottom level where market trading energy was temporarily most calmed” just before Kioxia’s stock price began to react in the market with full-scale heavy trading.
In other words, the current liquidity of the Tokyo market can be seen as having wound back to “the absolute bottom where trading has thinned out the most (a phase of energy accumulation)” within the AI semiconductor market of the past six months.

A wait-and-see mood before earnings announcements is prevalent among market participants. Precisely because trading is thin, it is an environment where the index is easily swayed by small amounts of buying and selling, but at the same time, it suggests that “we have reached a critical point where if even one powerful positive factor (catalyst) emerges, funds will flow back as if magma were erupting all at once.”

The world is waiting for the biggest trigger for this: the quarterly earnings of U.S.-based Meta Platforms (Meta) to be announced tonight.

The market’s prior reputation just before this is set extremely high. Depending on the capital expenditure (Capex) guidance shown by Meta and the progress in monetizing its proprietary AI agent “Muse,” the market is holding its breath to see if it will become a detonator for trillions of yen in money to flow back into the entire global high-tech market, or if it will invite disappointment.

4. Sector-by-sector trends: The “rise in 3 financial sectors” that went against falling interest rates and the sense of incongruity in “Toyota/Automobiles” caught in the VW wage freeze shock

Looking at the stock price indices by industry, “most industries rose” out of all 33 sectors, and only a few sectors declined. While a movement that broke the theory of buying financial stocks under falling interest rates was seen, an unnatural distortion occurred in the Japanese transportation equipment sector, which was caught up in European automotive news.

【Rising Sector ①: The rise of 3 financial sectors (banks, insurance, securities) against falling interest rates】

Today, the most prominent trend among sectors was the strong across-the-board rise in the financial sector.
As mentioned above, domestic long-term government bond yields (market interest rates) had been on a downward trend for the past few days following the strong 20-year bond auction the previous day. According to textbook logic, falling interest rates are a selling factor for bank stocks due to concerns about narrowing lending margins.
However, today, completely contrary to the trend of falling interest rates, mega-banks such as Mitsubishi UFJ Financial Group, as well as major non-life insurers and securities firms, were all bought.
Behind this is the fact that, without being misled by the interest rate decline of the past few days, institutional investors are convinced that “next week’s Bank of Japan meeting, and the additional interest rate hike cycle from the end of the year into next year, will not waver in the slightest,” leading to moves to preemptively buy back financial stocks that were oversold in the previous day’s sharp drop.

[Rising Sector 2: Non-ferrous Metals & Electric Appliances (Buybacks in wires, substrates, and memory)]

Following SpaceX’s NeoCloud reaching profitability and 3M’s strong earnings, the materials sector, which is essential for the physical expansion of AI data centers, has made a strong comeback.

In the non-ferrous metals sector, Fujikura and Furukawa Electric were bought, and in the electric appliances sector, Ibiden, a global leader in CPU package substrates, and semiconductor memory manufacturer Kioxia Holdings were also bought, occupying the top spots for positive contribution to the Nikkei Average.

[The Truth Behind the Falling Sector: Strong Discomfort Regarding ‘Toyota Motor’ Being Caught in the German VW Shock]

Meanwhile, what caused strong discomfort and suspicion among market participants in today’s falling sectors was the decline in the transportation equipment (automotive) sector.

The previous day, Germany’s largest automaker, Volkswagen (VW), announced a shocking policy: ‘No wage increases until 2030 (wage freeze) to overcome the management crisis.’ It was already known that VW’s performance was in serious trouble due to sluggish electric vehicle (EV) sales in the European market and fierce competition from Chinese manufacturers, but this news triggered a reckless associative sell-off (dumping the automotive sector) among global institutional investors, who began to wonder, ‘Aren’t all automakers around the world facing the same structural performance deterioration?’

Caught in this backlash, Toyota Motor and Nissan Motor were also sold off in the Tokyo market.
However, I feel strong doubts about this move.
Equating the individual circumstances of VW, which is struggling with a failed EV shift in Europe, with the reality of Toyota Motor, which is hitting record profits due to unprecedented sales of hybrid vehicles (HV) mainly in North America and emerging countries, and selling them off in a lump sum is clearly a market misunderstanding and feels very wrong. It is an unreasonable sell-off that ignores regional differences and product competitiveness, and for calm investors, it should be seen as an excellent opportunity to buy on the dip.

[Abnormalities in the Retail Industry: Lump-sum Selling of Drugstore Stocks]

In the retail sector, in addition to adjustments for stocks that had passed their earnings announcements, an unnatural movement was seen where the three major drugstore chains, MatsukiyoCocokara & Co. and Welcia Holdings, were all sold off. It is speculated that this was not due to common bad news regarding their performance, but rather a basket sell-off (lump-sum liquidation) by a specific fund.

5. Notable Individual Stocks

Today, I will explain the trends of notable stocks that moved due to their own unique factors amidst the benefits of NeoCloud re-evaluation, financial buying against interest rates, being caught in the European shock, and waiting for earnings.

① Fujikura and Furukawa Electric (5801): Return of real demand money to major wire manufacturers

In the non-ferrous metals sector, the two top wire manufacturers, Fujikura and Furukawa Electric, showed a strong rise, improving the sentiment of the entire market.

They had been beaten down due to concerns that ‘data center construction plans might stop’ following last week’s CoreWeave credit anxiety, but with the confirmation of SpaceX’s data center profitability, it was reaffirmed that the physical demand for optical wiring and power supply cables for AI data centers has not been damaged at all. Confidence in the high-profit story backed by real demand is returning.

② Ibiden (4062) & Kioxia Holdings (285A): Restoration of the semiconductor supply chain

Among the major high-tech stocks, Ibiden and Kioxia HD were both bought back, entering the top ranks of positive contribution to the Nikkei Average.

Ibiden rebounded on the back of its overwhelming global share of CPU package substrates for cutting-edge servers. Also, Kioxia HD, which had been forced into a sharp adjustment recently, saw its downside firmly supported by real demand buying aimed at an autonomous rebound, evaluating the sustainability of large-capacity storage demand for data centers.

③ Toyota Motor (7203): Unreasonable decline due to the backlash of the German VW wage freeze

Toyota Motor, the backbone of Japanese stocks, sank into negative territory compared to the previous day, becoming a drag on the transportation equipment sector.

Following the aforementioned announcement by Germany’s Volkswagen of a wage freeze until 2030, it was caught in a ‘risk-off sell-off against the entire automotive industry’ originating from Europe. However, the global demand for hybrid vehicles, which is the company’s strength, is extremely solid, making it a day where the divergence between fundamentals and stock price stood out.

④ Major Drugstore Groups (MatsukiyoCocokara, etc.): Sluggish due to basket selling without reason

In the retail sector, major drugstore chains were forced to show sluggish performance across the board.

Although inbound demand and domestic sales of pharmaceuticals and food are stable, a collective sector sell-off (selling to lower the ratio within a portfolio) by hedge funds and others was observed, leading to a supply-demand-driven decline that was disconnected from performance.

6. Future Outlook: Tonight’s biggest hurdle, the ‘Meta’ earnings report, the ‘Muse’ AI agent, and the rebound scenario leading into the global central bank week.

The Tokyo stock market rebounded today for the first time in three days, closing up 545 yen, despite stalling in the afternoon after the Nikkei Average briefly surged by 1,329 yen.

With trading value falling below 7 trillion yen for the third consecutive day, reaching a historic low level not seen since April of this year, the current market is in a state of extreme tension, waiting for the signal of a major global shift.

1. Announcement tonight (after the US market close on the 21st): The ‘Meta Platforms’ earnings report that holds the fate of the world.

The biggest hurdle that the global AI and semiconductor market is watching with bated breath.

[Key Point 1: Progress in the adoption and monetization of the AI agent ‘Muse’]
The consumer-facing autonomous AI agent ‘Muse’ developed by Meta has extremely high pre-market expectations. If a solid path is shown where AI begins to generate actual business revenue, such as through task delegation and payment integration, market skepticism toward AI investment will completely vanish.

[Key Point 2: Sustainability of Capital Expenditure (Capex)]
If it is confirmed that the massive data center investment plan will be maintained and promoted, a ‘trillion-yen scale global capital return’ will explode into Nvidia, as well as Japanese semiconductor manufacturing equipment (Tokyo Electron, Advantest), electric wires (Fujikura), and substrates (Ibiden).

2. Countdown to the ‘Big 3’ Central Bank Monetary Policy Meetings in Japan, the US, and Europe.

Next week is a super-special week where the ECB, US FOMC, and Bank of Japan meetings will all take place simultaneously.
The lack of official statements due to the blackout period is the primary cause of the current thin trading (below 7 trillion yen).

If these events pass with the Meta earnings report being received neutrally or favorably, and the central bank events next week are digested, the uncertainty that has been covering the market is likely to dissipate at once, leading to a full-scale year-end rally.

Investment strategy to take at the bottom of thin trading.

The greatest truth proven by today’s market is that ‘as shown by the profitability of SpaceX’s data centers, demand for AI infrastructure and monetization are steadily progressing, and market pessimism was clearly excessive.’

The fact that trading value has fallen below 7 trillion yen for three consecutive days indicates that the sellers’ energy has already been completely exhausted. The market is positioned on a launchpad, ready to soar like a rocket on the slightest bit of good news.

If the growth potential of the AI agent ‘Muse’ and the sustainability of capital investment are confirmed in tonight’s Meta earnings report, the Nikkei Average, which struggled in the afternoon today, will powerfully return to the road of reclaiming the 65,000 yen level and eventually the 70,000 yen milestone.

We are at an extremely important turning point where we should confidently hold ‘core AI data center stocks’ that showed a strong rebound today, such as Ibiden, Kioxia HD, and Fujikura, while calmly picking up the best buying opportunities for ‘the world’s strongest blue-chip value stocks’—such as mega-banks and insurance stocks that have begun to be bought in anticipation of the benefits of the rising interest rate trend, and Toyota Motor, which was unreasonably sold off due to the European VW shock—to reap the fruits of the ‘full-scale autumn rebound rally’ that will arrive after the Meta earnings report passes.