Global Market: Japan’s Nikkei struggles for direction as chip stocks weigh, bond yields fall

Japan’s Nikkei share average traded in a narrow range on Thursday as investors weighed lower bond yields and softer oil prices against weakness in Broadcom shares, which pressured the outlook for semiconductor-related stocks.

The Nikkei 225 was last up 0.21% at 64,461.68 after moving between gains and losses, while the broader Topix advanced 0.91% to 4,118.68.

Major U.S. stock indexes gained overnight, but Broadcom shares fell more than 3% at one point in extended trading after the California-based chip and infrastructure software company forecast quarterly revenue below Wall Street expectations.


Read more: Global Market Today: Asian stocks advance as oil slips, yen in focus

The weakness in Broadcom could limit gains in semiconductor-related stocks, which have been an important driver of the Nikkei, according to Reuters, citing a note from Ryotaro Sawada, senior analyst at Tokai Tokyo Intelligence Laboratory.

Japanese chip and artificial intelligence-related stocks were mixed. Chip-testing equipment maker Advantest fell 0.8%, while cable and optical fibre producer Fujikura declined 1.79%. Memory chipmaker Kioxia gained 0.67%, and semiconductor equipment maker Tokyo Electron rose 0.81%.

U.S. Treasury yields eased from multi-year highs overnight, while the yield on 30-year Japanese government bonds fell as much as 10 basis points on Thursday.

Oil prices also edged lower, with investors seeing no signs of fresh strikes in the latest escalation involving the United States and Iran. The decline in crude prices weighed on Japanese energy stocks.

Japan’s energy explorer sector dropped 2.57%, making it the weakest performer among the Tokyo Stock Exchange’s 33 sector sub-indexes. Inpex, Japan’s leading oil and gas explorer, fell 3.43%, while Fast Retailing, the parent of Uniqlo, declined 3.58%.

At the other end of the Nikkei, furnishing retailer Nitori Holdings jumped 6.62%, while Mitsubishi Motors gained 4.09%, making them the index’s biggest percentage gainers.

Investors were also awaiting Japan’s Ministry of Finance auction of around 600 billion yen ($3.78 billion) of 30-year government bonds later on Thursday.

A weak auction could push long-term interest rates higher and put additional pressure on technology stocks, while potentially benefiting bank shares, Reuters reported, citing Sawada.

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