SoftBank Surges on Tech Rally Amid Easing US Rate Hike Fears

SoftBank Group surged more than 5% in Tokyo on Friday as technology shares rebounded amid easing concerns of another US interest-rate hike. The Nikkei 225 climbed 1.8% to 69,523.56. This followed softer-than-expected US producer-price data, which pushed the probability of a Federal Reserve rate increase in September down to about 35%. For SoftBank, whose valuation is increasingly tied to AI assets like Arm and OpenAI, easier US rate expectations are supportive.

However, investors are also becoming more confident that the Bank of Japan will tighten again in September, creating currency risk. SoftBank's sensitivity to global technology sentiment has increased as Masayoshi Son concentrated the group around AI. Its net asset value jumped from about ¥40 trillion at the end of March to ¥72.3 trillion at the end of June, helped by gains in Arm and Intel.

Deutsche Bank analyst Peter Milliken has warned that investors are 'vulnerable to a reversal' in either elevated technology prices or the weak yen after the stock's enormous run. Markets now see a 76% probability of a September hike, according to Tokyo Tanshi, up from 24% on July 30.