Nikkei Jumps 1.7% to Snap Three-Day Losing Streak as Advantest and SoftBank Lead AI Rebound in Tokyo

Japan's Nikkei 225 rose sharply on Tuesday, ending a three-session losing streak as chip-related heavyweights rallied on renewed enthusiasm for artificial intelligence.

The Nikkei closed up 1,078.72 points, or 1.73%, at 63,268.37. It rebounded from Monday's close of 62,189.65, its lowest since late July. The index rose as much as 2.4% earlier in the session.

The broader Topix index rose more modestly and hovered near the 4,000 mark, which shows the gains were concentrated in a handful of large technology stocks.

Chip stocks lead

Semiconductor-related shares drove the rally:

Advantest: The chip-testing equipment maker surged about 10% in morning trade, making it the biggest contributor to the Nikkei's gain. SoftBank Group: The technology investor, a major backer of AI companies, rose about 6% to 7%. Kioxia: The flash memory maker jumped nearly 8% in morning trade. Tokyo Electron: gained about 4.5%. Screen Holdings: rose about 5%.

The gains mirrored a strong session on Wall Street, where the Philadelphia Semiconductor Index rose 2.8% on Monday. The Nikkei tends to track the chip index closely because of its heavy weighting in technology stocks.

Not all stocks gained. Pharmaceutical company Daiichi Sankyo fell about 6.5% in morning trade and was the biggest drag on the index. Only about half of the stocks on the Prime market rose.

Anthropic sparks relief

U.S. stocks were lifted by Anthropic, the developer of the Claude AI models, which publicly filed for an initial public offering on the Nasdaq. The filing showed rapid revenue growth along with heavy losses and large computing commitments.

"The market was relieved by the news about Anthropic's IPO," said Daisuke Hashizume, senior strategist at Daiwa Securities.

He said investors stayed cautious ahead of earnings this week from big U.S. technology companies.

"Investors were cautious about actively buying stocks ahead of earnings of US hyperscalers," Hashizume said. "But overall, only half of the stocks rose."

Alphabet, Microsoft, Amazon and Meta Platforms are all due to report quarterly results this week. Their capital spending plans are closely watched by Japanese chip equipment makers that supply the global semiconductor industry.

Rebound after slide

Tuesday's rally followed a difficult stretch. On Monday the Nikkei fell 0.8%, its third straight decline, as chip stocks were sold on concerns about overinvestment in AI and rising oil prices.

Monex Securities senior analyst Satoshi Saito said on Monday that "the Nikkei Stock Average is showing signs of short-term technical undervaluation," suggesting a rebound was possible.

The index has fallen from levels near 70,000 reached in July.

Yen weakens, officials warn

The yen weakened against the dollar, which traded around 157.5 to 157.7 yen, up from about 157 at the previous close.

Finance Minister Satsuki Katayama told parliament on Tuesday that the government was prepared to take decisive action against excessive currency movements, a warning aimed at speculators betting against the yen.

A weaker yen generally supports Japanese exporters by making their products cheaper abroad and boosting the value of overseas earnings.

BOJ decision ahead

The Bank of Japan holds a two-day policy meeting ending Friday. It is widely expected to keep its key interest rate at 1.25%, while leaving the door open to further increases if inflation persists.

Data showed underlying consumer inflation in Japan accelerated to 3.2% in September from 2.6% in August, its highest in nearly three years. Services prices rose 3.7% from a year earlier.

The U.S. Federal Reserve announces its decision on Wednesday, so Tokyo investors will know the outcome before the BOJ announcement.

Regional rally

Other Asian markets with large chip sectors also rose. South Korea's KOSPI jumped 3.1%, led by Samsung Electronics and SK Hynix.

Mainland Chinese stocks fell, however. The Shanghai Composite dropped 1.3% as the country's technology sector extended its recent sell-off.

Oil prices eased on hopes of lower tensions in the Middle East, with Brent crude trading around $115 a barrel. That relieved some pressure on Japan, which imports almost all of its oil.

_This article is for information only and does not constitute financial advice._