Japan’s Nikkei Reverses Gains as Chip-Related Shares Drop (UPDATE 1)

Reuters

12:44 JST, July 17, 2024 (updated at 16:15 JST)

TOKYO (Reuters) – Japan’s Nikkei share average reversed gains on Wednesday, as investors sold chip-related stocks to book profits and Tokyo Electron extended losses after a report that the United States was considering tougher trade rules in chip crackdown on China.

The Nikkei ended 0.43% lower at 41,097.69, after rising 0.46% earlier in the session on Wall Street’s strong finish overnight.

Wall Street stocks rose and the Dow Jones Industrial Average hit an all-time closing high on Tuesday after U.S. retail sales data supported the view that the Federal Reserve is approaching its easing cycle.

Investors sold chip-related shares, which had been behind the Nikkei’s recent rally, as they shifted their focus to other stocks, said Shuutarou Yasuda, a market analyst at Tokai Tokyo Intelligence Laboratory.

Tokyo Electron fell 7.46% and was the biggest drag on the Nikkei, after Bloomberg reported that the United States was considering using tougher rules for China if companies including the Japanese chip-making maker continued giving the country access to advanced semiconductor technology.

Chip-testing equipment maker Advantest fell 2.56%.

The broader Topix rose 0.37% to 2,915.21.

Defense-related stocks extended their gains from the prior session, as higher chances of Donald Trump winning the U.S. presidential race spurred so-called “Trump trades.”

Kawasaki Heavy Industries and Hitachi Zosen rose 10.43% and 6.58%, respectively.

Toho surged 11.97% and was the top percentage gainer on the Nikkei, after the film and entertainment company said its net profit jumped 31% in the latest quarter.

Of the 225 components on the Nikkei, 167 stocks rose and 56 fell, with two ending flat.