Japan’s Nikkei Edges Higher on Weaker Yen before Nvidia Earnings (Update 1)

Reuters

12:03 JST, August 28, 2024 (updated at 16:30 JST)

TOKYO, Aug 28 (Reuters) – Japan’s Nikkei share average closed higher on Wednesday amid a weaker yen, but earnings from AI darling Nvidia later in the day kept investors cautious.

The Nikkei ended up 0.22% at 38,371.76, reversing early declines, as the yen extended its slide against the dollar over the course of the session.

That put the index close to the top of its narrow range since mid-month, which has been anchored around the psychological 38,000 mark.

The broader Topix slipped 0.08%.

Market expectations for Nvidia’s financial report are sky-high, and anything short of a stellar forecast from the chipmaker could jolt investor confidence in the AI-fueled rally.

“The bar is extremely high, and depending on the result, stocks could swing wildly,” which kept Japanese investors largely sidelined, said Masahiro Ichikawa, chief market strategist at Sumitomo Mitsui DS Asset Management.

Semiconductor-sector shares were mixed, with chip-testing equipment maker and Nvidia supplier Advantest rising 4.18% to be the Nikkei’s biggest gainer by index points. Peer　Lasertec climbed 4.19%.

At the same time, chip-testing machinery giant Tokyo Electron finished slightly lower, while AI-focused startup investor SoftBank Group slumped 2.29%.

The yen traded about 0.4% weaker at 144.47 per dollar as of 0611 GMT, reversing course after starting the day by extending overnight gains to 143.69. On Aug. 15, it traded closer to 150 per dollar.

A stronger yen reduces the value of overseas sales, while also making stocks more expensive for overseas investors.

“Even though the yen is weakening a little now, the trend is for gradual yen appreciation, which is a weight on stocks,” Ichikawa said.

Automaker shares were mixed, with Toyota Motor rallying 3.88% and Honda advancing 0.7%, while Nissan slid 0.65% and Mazda eased 0.16%.

Rakuten Group led gainers on the Nikkei, jumping 9.19%, following share price target upgrades by Morgan Stanley MUFG Securities and Citi.