Nasdaq gains as yen jumps on Japan pension shift

Summary

The Nasdaq closed sharply higher as a rally in chip stocks led by Micron outweighed renewed Middle East tensions. The S&P 500 and Dow also advanced, while investors looked ahead to SK Hynix's US market debut after the AI memory chipmaker completed a major listing. The Japanese yen strengthened after Tokyo signalled state pension funds would increase domestic investment, easing pressure on government bonds and lifting the Nikkei. The US dollar weakened broadly, while the New Zealand dollar found support from shifting rate expectations. 

Equities

The FTSE 100 closed 0.2% lower on Thursday as a sharp fall in AstraZeneca outweighed gains in banking and mining shares, while the FTSE 250 rose 1% to end a three-day losing streak. Investors continued to watch developments in the Middle East, although company news had a greater impact on trading across the UK market.

AstraZeneca closed 6.2% lower on Thursday after its nerve disease treatment Wainua, developed with Ionis Pharmaceuticals, failed to meet the main goal in a late-stage clinical trial of reducing cardiovascular deaths and recurring heart problems. The setback pushed the pharmaceutical sector down 4.3%, making it the weakest-performing area of the FTSE 100.

Computacenter finished more than 7.2% higher after the IT services company said annual results are now expected to exceed market expectations. Strong demand for artificial intelligence infrastructure from hyperscale customers in North America and the UK supported the improved outlook.

Playtech surged 14.1% on Thursday, leading gains on the FTSE 250 after forecasting 2026 adjusted core profit above market expectations, supported by continued growth across the US and Latin America. Banks rose 2.2% and industrial metal miners gained 4.1%, while energy shares slipped 1.5% as oil prices fell more than 1%.

In the US, the S&P 500 closed 0.81% higher, the Nasdaq climbed 1.30% and the Dow Jones Industrial Average added 0.27% on Thursday. Technology shares led the advance as investors focused on developments in artificial intelligence ahead of the second-quarter earnings season.

Micron Technology jumped 4.5% after announcing plans to invest more than $250 billion in the US through 2035 to expand memory chip production for AI demand. Applied Materials rose 3.2%, while Sandisk gained 7.6% as semiconductor shares continued to recover.

Meta Platforms also finished higher after Reuters reported that the company plans to begin manufacturing its own AI chips from September. Analysts expect technology companies to drive much of the anticipated 24% year-on-year growth in S&P 500 earnings during the upcoming reporting season.

Consumer stocks moved in the opposite direction. PepsiCo closed 3.3% lower despite reporting second-quarter revenue above expectations, while Costco Wholesale fell 4.2% to a six-month low after reporting slower comparable sales growth for June.

Forex & Commodities

The US dollar eased early on Friday after the Japanese yen strengthened on fresh policy announcements from Tokyo. Japan said it plans to encourage major pension funds, including the Government Pension Investment Fund, to allocate substantially more money to domestic financial assets, helping lift the yen to around ¥161.6 per US dollar. Sterling also advanced against the US dollar, trading near $1.343, while the euro rose to around $1.144. Against the stronger yen, however, both the pound and the euro weakened.

The New Zealand dollar also gained support after the Reserve Bank of New Zealand raised interest rates this week and indicated that further policy tightening remains possible. Westpac now expects additional rate increases later this year, with the cash rate forecast to peak at 4.00% in 2027. By contrast, the US dollar index edged lower to around 100.8 after finishing the week broadly unchanged overall.

Gold slipped early on Friday and remained on course for a weekly decline, with spot gold trading near $4,116 per ounce. Investors continued to assess the inflation implications of renewed military action between the US and Iran, while expectations of higher US interest rates reduced the appeal of non-yielding assets. Minutes from the Federal Reserve's June meeting also highlighted growing concern among policymakers over persistent inflation. HSBC responded by lowering its average gold price forecasts for both 2026 and 2027, citing a more hawkish outlook for US monetary policy and a stronger dollar.

Oil prices moved higher on Friday, with Brent crude trading around $76.49 per barrel and US West Texas Intermediate at $72.27. Both benchmarks remained on course for strong weekly gains as renewed fighting between the US and Iran disrupted shipping through the Strait of Hormuz. Tanker movements remained close to a standstill after fresh attacks in the Gulf, although comments from US President Donald Trump suggesting the conflict would not escalate further helped limit additional gains.