Key Takeaways
- Japan's Nikkei index gained over 2% on Monday.
- Chip-related stocks in Japan followed their US counterparts higher.
- Advantest and Tokyo Electron saw significant gains, rising over 4% each.
Japan's Nikkei share average surged more than 2% on Monday, mirroring the performance of US chip-related stocks. The broader Topix index also rose by 0.81%. Market volatility decreased as US Treasury Secretary Scott Bessent's actions curbed bond yields and stabilized the yen.
Chief strategist Mamoru Shimode at Resona Asset Management attributed the rise to a reduction in market volatility, making it easier for investors to adopt a risk-on approach. Key chip-related companies such as Advantest and Tokyo Electron witnessed substantial gains, with Advantest's stock rising over 4% and Tokyo Electron's also increasing by more than 4%.
Memory maker Kioxia experienced a 6.8% increase, contributing to the overall rise in chip-related stocks. The semiconductor index on Wall Street also saw a 3.4% rise on Friday, despite a robust jobs report that raised the likelihood of the US Federal Reserve raising interest rates.
The Nikkei announced that Kokusai Electric would be added to the benchmark from October as part of a regular reshuffle, leading to an 8% jump in its share price. However, not all sectors performed well; camera and audio equipment maker Sony Group fell 2%, and gaming companies like Konami Group and Bandai Namco Holdings declined by nearly 2% each.
Bank shares also saw a downturn, with Mitsubishi UFJ Financial Group and Sumitomo Mitsui Financial Group dropping more than 1% each. Of the over 1,500 stocks trading on the Tokyo Stock Exchange's prime market, 48% increased, 48% decreased, and 3% remained unchanged.
The rally in the Nikkei index reflects the broader global trend in the semiconductor industry, where US stocks have shown resilience despite economic uncertainties. Market analysts believe that the reduction in volatility and positive performance of key chip manufacturers are driving the overall market sentiment.
With US Treasury Secretary Scott Bessent seemingly curbing bond yields and stemming the fall of the yen, market volatility has fallen.
Mamoru Shimode, Chief Strategist at Resona Asset Management
