Japan's Nikkei share average rose 0.8% to 66,682.88 by midday on Friday, supported mainly by gains in technology and chip-related stocks, according to Reuters. The broader Topix gained 0.9% to 4,152.88, with the Nikkei on track for a weekly gain of about 1% while the Topix was headed for a 2.1% advance. The recovery came after Thursday's market reversal when the Nikkei had opened higher following Nvidia's strong AI outlook but later turned lower due to weakness in chip-testing equipment maker Advantest. As per Business Standard, the mixed performance reflects selective investor interest across different technology sectors, with markets lacking clear direction as technology stocks moved in different directions.
Technology and chip stocks led the market recovery, with 139 of the Nikkei's 225 components advancing compared with 80 decliners, while six stocks remained unchanged. Security software company Trend Micro jumped 5.5%, making it the biggest percentage gainer on the Nikkei, while Fujitsu climbed 4.5%. The gains were supported by Wall Street's semiconductor rally, with the Philadelphia Semiconductor Index rising 2.3% on Thursday, which helped reinforce investor appetite for Japanese chip and technology stocks. Technology investor SoftBank Group also declined 0.56%, contributing to the market weakness, while investors remained cautious about buying chip-related stocks following their sharp gains during the first half of the year.
Underlying inflation in Tokyo accelerated for a third consecutive month in August, according to data released on Friday, strengthening expectations that the Bank of Japan could consider raising interest rates. These figures, which are closely watched as an indicator of nationwide price trends, are likely to keep Japanese equities sensitive to developments in global bond and currency markets. The inflation concerns, combined with higher oil prices and rising bond yields, limited broader advances despite the technology sector gains. As per Reuters, investors are adopting a cautious approach ahead of Federal Reserve Chair Kevin Warsh's Jackson Hole speech for clues on US interest rates.
Investors are looking for clues on the future direction of US interest rates after several Fed officials raised concerns about persistent inflation. Warsh has so far avoided offering clear forward guidance on the path for borrowing costs, with market participants waiting for greater clarity before making investment decisions. According to Nomura Securities strategist Maki Sawada, investors are adopting a cautious approach ahead of the speech, with the uncertainty surrounding US monetary policy likely to keep Japanese equities sensitive to developments in global bond and currency markets.
