TOKYO: Japan’s benchmark stock index edged down for a second day on Wednesday, teetering below an all-time high as traders waited to see if the financial results of US chipmaker Nvidia justify the AI euphoria that has gripped global share markets recently.
The Nikkei share average was down 0.46% at 38188.85 by the midday close, with 147 of its 225 constituents declining.
Over the past week or so, the benchmark gauge has been edging closer to the lifetime record of 38,957.44 set on the final trading day of 1989 at the peak of Japan’s bubble economy.
On Friday, the benchmark index pushed as high as 38,865.06 before pulling back into the close. The broader Topix was down 0.45% at 2620.45.
Traders moved cautiously ahead of the financial results, which are due later on Wednesday and could test the AI frenzy that’s gripped both US and Japanese markets.
The Nikkei’s momentum towards the 35-year record has been stalled by Wall Street, which closed lower overnight after returning from a holiday on Monday, as investors worried whether Nvidia’s quarterly results will justify its expensive valuation.
The broader Philadelphia semiconductor index declined over 1% as Nvidia and other chip stocks stumbled.
Nikkei’s rally pauses as record high beckons
Nikkei’s tech-related shares sagged, with chip-testing equipment maker Advantest, which counts Nvidia among its customers, down 3.17%.
Chip-making equipment giant Tokyo Electron fell 1.3%. SoftBank Group, which invests in an AI-focused startup, was down about 2% by the midday break.
Japan’s chip giants, which share ties with high tech companies in the US, have had a “significant impact” on the Nikkei, said Sumitomo Mitsui DS Asset Management’s Chief Market Strategist Masahiro Ichikawa, putting plenty of weight on Nvidia’s revenue report.
If the tech company’s results disappoint, Ichikawa sees potential for the Nikkei to fall below 38,000 points, while a surprise to the upside could be enough to push the index to all-time highs.
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