Japan stocks rebound as Nvidia earnings deliver tech relief

Japanese shares rose, rebounding from a four-day losing streak, as AI-related stocks climbed following an upbeat earnings forecast from US chip titan Nvidia Corp.

The blue-chip Nikkei 225 gained as much as 3.7%, the most since Oct. 6, to 50343.25 while the broader Topix index rose as much as 2.3% to 3319.54 in early Tokyo trading. Tech names led the rise, with SoftBank Group Corp. jumping as much as 9.1% and chip gear makers Tokyo Electron Ltd. and Ibiden Co Ltd. advancing over 7%.

The gains in Japan come after Nvidia’s shares rose over 4% post-market following the company’s announcement of a better-than-expected revenue forecast for the January quarter.

“Nvidia’s results were virtually flawless and have been well-received by investors,” said Takashi Ito, senior strategist at Nomura Securities Co. The earnings should fuel a robust rebound in Japanese shares, he said.

Tech stocks have been among the biggest drags on Japanese equities this week, amid a worldwide pullback on worries that their valuations were running too high. Nvidia’s results reassure investors that “the pace of AI spending is not an issue, for now,” said Ito.

Risks still linger for Japanese equities ahead of the announcement of Prime Minister Sanae Takaichi’s economic stimulus package, expected on Friday, however. Government bond yields have risen to multi-decade highs, with the yen extending its decline to the 157 range to the dollar overnight.

“Growing concerns of Japan’s spending plans under Takaichi’s regime should keep investors on alert,” Thursday, said Amir Anvarzadeh, Japan equity strategist at Asymmetric Advisors Pte. Tokyo’s ongoing spat with Beijing is another downside risk to keep in mind, he said.

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