Japan's Nikkei set for biggest weekly gain in five months as AI optimism lifts sentiment

Japan's Nikkei share average is on track for its biggest weekly gain in five months, rebounding from a sharp decline last week as upbeat corporate earnings and renewed optimism around artificial intelligence (AI) stocks lift investor sentiment despite uncertainty around chipmaker Nvidia.

The Nikkei rises 1.25% to 61,576.91 as of 0140 GMT on Friday, putting it on course for a 7.3% gain for the week. This would mark its strongest weekly performance since the week of June 15.

The broader Topix advances 0.63% to 3,962.08 and is headed for a weekly gain of around 7%, its biggest since mid-August 2024, Reuters reported.


Read more: Global Market Today: Asian stocks gain after Nvidia shakeup, oil steady

Semiconductor stocks lead the gains, with Advantest climbing 5.9%, Tokyo Electron rising 3% and Kioxia adding 2.9%.

The rally comes despite an overnight selloff in Nvidia shares that weighed on US equities. However, gains in rival chipmakers Broadcom and Alphabet indicate that investor enthusiasm for the broader AI sector remains resilient, Reuters reported.

Maki Sawada, an equities strategist at Nomura Securities, attributed this week's gains in the Nikkei and Topix partly to the recovery in semiconductor and AI-related stocks, which had remained under pressure for an extended period.

Developments surrounding Nvidia CEO Jensen Huang's reported departure have also fuelled uncertainty over the company's future direction, as well as the potential implications for US chip export restrictions and access to the Chinese market, Reuters reported.

Read more: Jensen Huang forfeits $108 million in unvested Nvidia equity

Japanese equities had weakened in the previous session amid concerns over the Nvidia developments, setting the stage for Friday's recovery, Sawada said, according to Reuters.

Market breadth remains positive, with 138 stocks advancing in the Nikkei 225, compared with 82 decliners, while five stocks remain unchanged.

Banking stocks on the Tokyo exchanges gain around 1%, tracking a rise in US Treasury yields amid speculation over potential US interest rate hikes. Japan's three largest banks are scheduled to announce their earnings later in the day.

Among individual stocks, Amada emerges as the biggest percentage gainer in the Nikkei 225, rising 9.46%. Socionext follows with a gain of 6.77%, while Trend Micro advances 6.61%.

On the losing side, Terumo falls 7.39%, making it the biggest decliner. Haseko drops 6.12%, while Mercari slips 3.68%, according to Reuters.

(Disclaimer: This article is based on inputs from agencies. These do not represent the views of The Economic Times.)