Key Takeaways
- Japan's Nikkei 225 index rose 1.5% after a three-day losing streak.
- AI-related shares and semiconductor companies led the gains in Tokyo.
- Higher oil prices due to US-Iran tensions dampened overall market sentiment.
Japan's Nikkei 225 index rebounded on Thursday, climbing 1.5% to close at 67,832.41 after a three-day losing streak. The broader TOPIX also rose by 0.2%, reaching 4,015.88 points. This recovery was driven primarily by gains in AI-related shares and semiconductor companies.
Key sectors such as flash memory chipmaker Kioxia, which saw its share price jump 9.4%, and chip testing equipment maker Advantest, whose stock surged 6.4%, contributed significantly to the Nikkei's rise. Additionally, cables and optical fibre producer Fujikura also advanced by 5.4%.
The positive momentum in Japan was bolstered by overnight gains on Wall Street, particularly following a $30 billion chip-supply agreement between Broadcom and Apple, as well as reports that China plans to allow its top AI firms to purchase Nvidia's H200 chips. These developments appear to have fueled expectations for business expansion across Nvidia’s supply chain, including in Japan.
However, concerns over the Middle East returned to the fore after US President Donald Trump declared an interim agreement with Iran was 'over.' The US military announced new strikes on Iran aimed at keeping the Strait of Hormuz open. As a result, oil prices rose about 1%, which dampened overall market sentiment and rekindled inflation concerns in Japan's government bond market.
The rise in oil prices also pushed the benchmark 10-year JGB yield to a fresh 30-year high, combined with worries over fiscal health. This led to declines in sectors sensitive to interest rate movements, such as real estate, which fell by 1.8%. Among the biggest percentage losers were Mitsubishi Materials Corp (down 6.2%) and Yokohama Rubber Co Ltd (losing 4.4%).
Market breadth was negative with 156 losers on the Nikkei against 68 winners, indicating a mixed performance across different sectors.
Equities strategist Wataru Akiyama at Nomura Securities commented, 'The news on China appears to have fuelled expectations for business expansion across Nvidia’s supply chain, including in Japan.' However, he also noted that concerns over the Middle East and higher oil prices kept investor optimism in check.
