Japan’s Nikkei Ends Flat as Chip Gains Counter Uniqlo Owner’s Retreat (Update 1)

Reuters

13:10 JST, March 26, 2024 (updated at 17:00 JST)

TOKYO (Reuters) – Japan’s Nikkei share average closed little changed on Tuesday, as gains in chip-related stocks offset declines by heavyweights such as Uniqlo-owner Fast Retailing and Nissan Motor.

The Nikkei’s three biggest supports were in the semiconductor sphere, led by chipmaking-equipment giant Tokyo Electron, as they tracked a record rally in U.S. peer Nvidia.

However, Nissan slumped nearly 4% after an update to its medium-term business plan that underwhelmed investors.

Fast Retailing sagged 1.63%, continuing its retreat from Friday’s record high.

The Nikkei finished the day off 0.04% at 40,398.03 while the broader Topix rose 0.11%.

On Monday, the Nikkei slid 1.16% after hitting an all-time peak of 41,087.75 on Friday. This year, it has rallied more than 20%.

Noting support from the upward-pointing five-day moving average, “I think it would be quite difficult for the Nikkei to turn lower,” said Kazuo Kamitani, an equity strategist at Nomura Securities.

However, the market lacks a clear sense of direction amid a dearth of fresh trading cues, he said.

Tokyo Electron rose 0.54% and was the biggest gainer by index points due to its heavy weighting. Silicon producer Shin-Etsu Chemical was no. 2, advancing 1.45%. Screen Holdings, another chipmaking-equipment manufacturer, was next, rising more than 4%.

Nvidia, the company at the center of the artificial intelligence fervor, notched a second successive all-time closing high on Monday, after extending its winning run to a sixth straight session.

Meanwhile, BlackRock increased its overweight position on Japanese equities, citing the Bank of Japan’s (BOJ) continued dovish stance despite exiting negative interest rates last week.

“We think the BOJ will act cautiously and not sabotage the return of mild inflation,” BlackRock said in a note.

“Japanese equities become our highest-conviction tactical view as solid corporate earnings and shareholder-friendly reforms keep playing out.”