Japanese equities bounced back on Thursday as investors took heart from an upbeat earnings forecast by US chip giant Nvidia Corp, lifting AI-related stocks and ending a four-day losing streak.
The Nikkei 225 climbed as much as 3.7% to 50,343.25, its strongest gain since early October, while the broader Topix index rose 2.3% to 3,319.54 in early Tokyo trading. Technology shares led the rebound, with SoftBank Group surging 9.1% and chip equipment makers Tokyo Electron and Ibiden advancing over 7%.
Nvidia’s shares jumped more than 4% in after-hours trading following the company’s better-than-expected revenue forecast for the January quarter. “Nvidia’s results were virtually flawless, and have been well-received by investors,” said Takashi Ito, senior strategist at Nomura Securities. He added that the earnings should fuel a robust rebound in Japanese stocks.
Technology had been among the largest drags on Japanese equities this week as global investors worried about high valuations. According to Ito, Nvidia’s results reassure the market that the pace of AI spending is “not an issue, for now.”
Despite the positive sentiment, risks remain ahead of the expected announcement of Prime Minister Sanae Takaichi’s economic stimulus package on Friday. Government bond yields have climbed to multi-decade highs, while the yen extended its slide to around 157 against the US dollar overnight.
“Growing concerns over Japan’s spending plans under Takaichi’s regime should keep investors on alert,” said Amir Anvarzadeh, Japan equity strategist at Asymmetric Advisors. He also highlighted the ongoing tensions between Tokyo and Beijing as a potential downside risk.
