Economy 2 MIN READ

Japan’s Nikkei rises for fourth straight day as Nvidia lifts chip shares

August 24, 2023By Reuters

Japan’s Nikkei share average rose for a fourth straight session on Thursday, its longest winning streak since mid-June, as US chip designer Nvidia’s record earnings lifted Japanese tech shares.

The Nikkei finished up 0.87% at 32,287.21, near the day’s high, taking its gains for the week to 2.66%.

Chip-making equipment firm Tokyo Electron  and chip-testing machine manufacturer Advantest powered the Nikkei, contributing a combined 104 index points. AI-focused startup investor SoftBank Group contributed another 36 points.

Nvidia – the centre of global AI fervour – surged nearly 10% following the Wall Street close after it forecast fiscal third-quarter revenue well above analysts’ estimate.

Of the Nikkei’s 225 components, 156 rose versus 67 that fell, with two flat.

The broader Topix added 0.42%.

The gains come ahead of the US Federal Reserve’s annual symposium in Jackson Hole, Wyoming, later in the day, which could offer hints on the monetary policy trajectory. Bank of Japan governor Kazuo Ueda will also attend.

Tokyo Electron advanced 3.25% and Advantest rose 1.6%. SoftBank Group added 2.68%.

The Nikkei’s biggest gainer, though, was Pacific Metals, which jumped 5.1% after announcing a deal to develop nickel refining technology using microwaves, which will reduce greenhouse gas emissions.

Meanwhile, the banking sector climbed 0.71%, resuming its march towards the eight-year peak hit at July end, when the BOJ unexpectedly doubled the effective cap on 10-year yields to 1%, boosting the outlook for revenue from lending.

The 10-year yield touched a 9-1/2-year high of 0.675% on Wednesday, although it pulled back as far as 0.645% in the current session.

“Chances are that the BOJ will be reducing (bond) buying, as it’s already doing, allowing the yield to drift up towards 100 basis points,” which will keep banks outperforming the broader market, said Nicholas Smith, a strategist at CLSA.

“I wouldn’t be surprised if we were there within this year.”

(Reporting by Kevin Buckland; Editing by Sonia Cheema and Dhanya Ann Thoppil)

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