Japan's Nikkei drops as Middle East conflict, mixed earnings weigh

TOKYO: Japan’s Nikkei share average fell on Thursday as a deadlock in US-Iran peace negotiations and mixed corporate earnings kept investors on the sidelines, overshadowing stellar artificial intelligence-driven results from major US tech companies.

The Nikkei 225 Index was down 0.8% at 59,427.56, ahead of a midday recess. The broader Topix slid 1.4% to 3,719.52.

“Amid concerns over the situation in the Middle East and with earnings reports set to be released soon, the market is in a wait-and-see mood,” said Naoki Fujiwara, senior fund manager at Shinkin Asset Management.

“Since this falls between holiday periods, buying interest is not especially strong, and because price levels remain high, profit-taking is emerging.”

Oil prices extended gains on Thursday after rising more than 6% in the previous session on supply concerns as talks to end the US-Israeli war on Iran have deadlocked.

AI-related shares on the Tokyo bourse were mostly lower, even after Alphabet topped Wall Street estimates for quarterly revenue as enterprise spending on AI delivered the best quarter of reported growth for its cloud unit yet.

Chip-testing equipment maker Advantest was down 3.1% and chip-making equipment maker Tokyo Electron traded nearly 1% lower.

IT services firm Fujitsu was the biggest daily percentage loser, plummeting as much as 15.2% in its biggest drop in 11 years after its earnings outlook missed analysts’ expectations.

Shares of Oriental Land lost 8.6% after the Tokyo Disney Resort operator said it would see a decline in operating profit for this year due to increased labour costs and repair expenses.

Telecom and IT solutions provider NEC shed 6.7%.

Bucking the overall trend, TDK shares rose to a record high after the electronic components maker forecast a 15% increase in net profit for the current business year, above analysts’ estimates.

Sumco, a leading silicon wafer supplier for semiconductors, jumped 15.1% and Renesas Electronics, a microcontroller and automotive chips maker, advanced roughly 10%.