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Japan earnings beat broadens rally beyond AI amid higher oil costs
About 71% of Japan’s local firms topped analyst profit estimates in the three months ended June, while aggregate net income at the 500 biggest companies exceeded ¥21 trillion.
Japan’s latest earnings season showed the largest profit beat in five years, even as oil costs remained elevated, and that has helped shift expectations for Japan’s stock rally beyond AI and technology leadership, according to Yahoo Finance citing Bloomberg data. Across the three months ended June, 71% of local companies reported profits above analyst forecasts. Aggregate net income at the 500 biggest firms topped ¥21 trillion, or about $132 billion, surpassing the previous record of roughly ¥18 trillion set a year earlier.
Profitability also improved, with Topix companies projected to post record margins of 9.3%, the highest level in the series dating back more than three decades. The results point to profit growth broadening across sectors, as companies appeared able to pass higher costs through to customers.
Bloomberg notes that the rally may be entering a new phase, with gains no longer limited to AI-related beneficiaries. A strategist at Resona Holdings, Hiroki Takei, said the better-than-expected earnings were not confined to exporters and semiconductor-linked firms, and that domestic-demand strength is encouraging for investors because it suggests pricing power that can support margins and valuation.