Japan's Nikkei rebounds as AI shares gain, oil tempers broader mood

TOKYO: Japan’s Nikkei share average rebounded on Thursday after a three-day losing streak, as AI-related shares tracked gains in the US technology sector, though higher oil prices following renewed US-Iran hostilities kept investor optimism in check.

The Nikkei 225 index climbed 1.5% to 67,832.41 in morning trade.

The broader TOPIX rose 0.2% to 4,015.88. Semiconductor-related shares anchored the Nikkei’s rise, with flash memory chipmaker Kioxia jumping 9.4% and chip testing equipment maker Advantest surging 6.4%, while cables and optical fibre producer Fujikura advanced 5.4%.

Overnight, the Nasdaq rose following a more than $30 billion chip-supply agreement between Broadcom and Apple , and a report that China plans to allow its top AI firms to buy a limited number of Nvidia’s H200 chips.

The news on China “appears to have fuelled expectations for business expansion across Nvidia’s supply chain, including in Japan,” said Wataru Akiyama, an equities strategist at Nomura Securities.

Concerns about the Middle East returned to the fore after US President Donald Trump declared that an interim agreement to end the war with Iran was “over.”

The US military said on Wednesday it was launching fresh strikes on Iran aimed at keeping the Strait of Hormuz open to traffic and in response to Tuesday’s assault on three cargo ships transiting the strait.

Oil prices rose about 1% on Thursday. Japan’s air transport and transport equipment sectors fell more than 2% at one point.

Higher oil prices rekindled inflation concerns in the Japanese government bond market.

Combined with worries over fiscal health, that pushed the benchmark 10-year JGB yield to a fresh 30-year high.

Real estate, which is sensitive to interest rate moves, fell 1.8%.

Market breadth was negative with 156 losers on the Nikkei against 68 winners.

Among the biggest percentage losers in the index were Mitsubishi Materials Corp, down 6.2%, and Yokohama Rubber Co Ltd, losing 4.4%.