TOKYO: Japan’s Nikkei share average rose during the morning session on Wednesday, with technology shares rallying as the market reacted favourably to US semiconductor stocks’ gains overnight.
US chip star Nvidia overtook Microsoft to become the world’s most valuable company, ending the day with a market capitalization of $3.22 trillion.
The Philadelphia Semiconductor index climbed more than 1%.
The news supported Japan’s tech-related shares, which helped lift the Nikkei by 0.58% to 38707.21 by the midday break.
The index was on track for a second straight day of gains. The broader Topix gained 0.72% at 2735.19.
“There were some concerns last week about political risk in Europe and the Nikkei also declined. But since the beginning of this week, US and European shares have steadied, and Nvidia performed strongly,” said Masahiro Ichikawa, chief market strategist at Sumitomo Mitsui DS Asset Management.
The combination has improved sentiment, he said. Trading volumes were low on Wednesday, however, limiting large moves in stocks.
Investors were also waiting for the Bank of Japan’s specific plans regarding the pace and size of tapering, which the central bank said it would announce at its July monetary policy meeting.
“Since we don’t know the details yet, it’s difficult to predict how yields will react,” said Ichikawa.
Japan’s Nikkei trades 1% higher after sharp drop
Rising yields tend to weigh on growth stocks since higher rates offer investors less risk while also making borrowing to fuel growth more expensive.
In individual stocks, AI-focused startup investor SoftBank Group gained 2.9% while chip-testing equipment maker Advantest, which counts Nvidia among its customers, climbed 3.5%.
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