Japan AI shares follow US peers higher, driving Nikkei toward record high

TOKYO: Japan’s Nikkei share average soared more than 2% on Friday, bringing it close to last week’s record peak, as AI shares rallied on the back of gains for US peers.

The Nikkei climbed 2.4% to 63,127.44 late in the morning session, putting it within spitting distance of the high of 63,799.32 from May 14.

The broader Topix added 1% to 3,891.71. A closely watched US chip share gauge, the Philadelphia SE Semiconductor Index, advanced 1.3% overnight.

Japanese equities have stormed back from multi-week lows hit on Wednesday, buoyed in large part by signs the Iran war may be reaching a conclusion, which have also helped lower oil prices and global bond yields.

“While the correction in Japanese equities - particularly AI stocks - could linger, we do not expect it to become prolonged or severe,” BofA Securities strategists Masashi Akutsu and Tetsuhiro Takuyama wrote in a report.

“From a medium-term perspective, we maintain a preference for AI-related names and a bullish stance on Japanese equities.”

On Friday, AI-focused investor SoftBank Group was by far the biggest support for the Nikkei, contributing 549 of the index’s total 1,432 point gain with an 11.1% surge.

Chip-equipment heavyweights Tokyo Electron and Advantest were also strong contributors, reversing initial losses to be up 2.2% and 0.8%, respectively.

Notably, though, the split among Nikkei constituents was much more balanced, with 117 rising, 107 falling and one flat.

In the broader market, 17 of the Tokyo Stock Exchange’s 33 industry groups gained, led by a 6.7% jump for nonferrous metals - a category that included data centre cable makers Furukawa Electric and Fujikura, which rose 9% and 8%, respectively.