Japan's Nikkei retreats from record high as Iran conflict concerns resurface

TOKYO: Japan’s Nikkei share average touched a record high early on Monday before ending lower, as the Middle East crisis outweighed optimism over corporate earnings and technology investment.

U.S. President Donald Trump rejected Iran’s response to a proposal for peace talks, dimming hopes for an end to the conflict that has driven up global energy costs.

The benchmark Nikkei 225 Index fell 0.5% to close at 62,417.88, erasing an earlier gain to 63,385.04 in the session.

The broader Topix gauge, which is less exposed to geopolitical factors, climbed 0.3% to 3,840.93.

Wall Street climbed to record highs on Friday, underpinned by artificial intelligence-related stocks such as Nvidia and SanDisk.

The optimism carried into Japan, where chipmaker Kioxia jumped 3.26% on Monday after a 22% surge last week.

Japan’s Nikkei retreats from record high as SoftBank Group falls

Shares of video game maker Konami Group and Japan Tobacco were among the top gainers on the Nikkei, jumping 10.25% and 6.85% respectively, after both companies posted strong earnings late on Friday.

“Capital investment in AI-related sectors is increasing, and the view that strong demand for these companies will continue is a positive factor for shares,” said Wataru Akiyama, an equities strategist at Nomura Securities.

“However, uncertainty surrounding the situation in the Middle East has intensified, and economic data (in the U.S.) was also released that raised concerns about consumer sentiment.”

Higher gasoline prices dragged U.S. consumer sentiment to a record low in early May, data showed on Friday.

There were 132 advancers on the Nikkei index against 89 decliners. After Konami, the largest percentage gainers in the index were Ajinomoto, up 9.3%, followed by Sony, which surged 8.3%.

Nintendo was the sharpest decliner, down 8.44%, after the company hiked prices on its Switch 2 video-game console.