Nikkei Falls to 3-week Low as Chip Shares Decline

Reuters

12:16 JST, December 5, 2023

TOKYO (Reuters) – Japan’s Nikkei share average touched a three-week low on Tuesday, as an overnight rise in U.S. Treasury yields drove a heavy sell-off in Advantest and other chip-related stocks.

By 0206 GMT, the Nikkei was down 1.4% at 32,754.33, trading at its lowest level since Nov. 14.

“Investors unwound high-technology stocks in today’s session. Those shares had been bought amid declines of U.S. yields,” said Naoki Fujiwara, senior fund manager at Shinkin Asset Management.

“The overnight rise on the U.S. Treasury yields became a cue for a sell-off. Investors were watching for how much the yields would rise.”

U.S. stocks ended lower on Monday, with megacaps Microsoft, Apple, Nvidia and Amazon dipping over 1%, pressured by higher U.S. 10-year yields ahead of key employment data due this week.

Most of the Nikkei’s top percentage losers were chip-related, with Advantest losing 5.41%, Tokyo Electron falling 3.5% and Screen Holdings slipping 4.5%. Renesas Electronics lost 4.55%.

The broader Topix slipped 0.74% to 2,345.22.

A smaller decline of the Topix than the the Nikkei’s loss was a reflection of a real market condition, said Fujiwara at Shinkin Asset.

Cloud service provider Sakura Internet surged 20% after Nvidia CEO Jensen Huang said the U.S. semiconductor giant would work with Japanese companies such as Sakura Internet to build artificial intelligence factories for Japan.

“The desire to create Japan’s large language model is very real and the Prime Minister is very urgent,” Huang said after his meeting with Japanese Prime Minister Fumio Kishida on Monday.

“The industry leaders are very urgent and that’s the reason why we’re building the AI factories here in Japan. That is step number one.”

Robot maker ACSL surged 9.21% after an activist investor Oasis Management revealed its holding of a 10.47% stake in the company.