Japan's Nikkei extends rebound as AI-related stocks advance

TOKYO: Japan’s Nikkei share average rose nearly 3% on Tuesday, extending its rebound from a tech-led selloff on Friday as AI-related stocks surged.

The Nikkei rose 2.88% to 60,471.05 by 0158 GMT, recouping most of Friday’s losses in the past two sessions.

The broader Topix was up 2.27% at 3,904.67.

“The Nikkei’s sharp gains in the latest two sessions are a surprise,” said Kazuaki Shimada, chief strategist at IwaiCosmo Securities.

“But the gains were limited as investors would not want to bet the Nikkei to cross 61,000.”

The Nikkei fell nearly 6% on Friday as AI-related stocks dropped on concerns that the US Congress could slow AI investment following the Democrats’ landslide victory in the midterm elections.

On Tuesday, technology investor SoftBank Group surged 14.38%, while chip-related Advantest and Tokyo Electron rose 4.93% and 5.66%, respectively.

The gains came despite a 4.2% overnight fall in Nvidia amid controversy surrounding CEO Jensen Huang.

“The market so far sees the impact of the issue as limited to Nvidia rather than the broader industry,” said IwaiCosmo’s Shimada.

Memory-chip maker Kioxia jumped 7.6%.

Some investors sold Kioxia shares purchased on margin on Friday to avoid margin calls.

Outstanding margin-buying positions fell to 48.22 million shares from 52.85 million a day earlier, Tokyo Stock Exchange data showed.

Kioxia accounts for a significant share of outstanding margin-buying positions after emerging as a key driver of the Nikkei’s rally to a record high in June.

The stock has since been hit by weakening sentiment toward AI-related shares.

JX Advanced Metals rose 2.2% after the maker of chip materials raised its net profit forecast for the year ending next March by 14%.

Toyota Motor fell 1.63% and was the biggest drag on the Topix.

Soy sauce maker Kikkoman fell 13% and was the biggest percentage loser on the Nikkei.