Japan’s Nikkei Stock Average Slips as Jitters Set in before Nvidia Results (UPDATE 1)

Reuters

12:26 JST, November 20, 2024 (updated at 16:25 JST)

TOKYO (Reuters) – Japan’s Nikkei share average fell on Wednesday as caution set in ahead of U.S. AI darling Nvidia’s results and outlook later in the day, which some fear could be below market expectation.

The Nikkei finished 0.2% lower at 38,352.34, while the broader Topix closed down 0.4% at 2,698.29.

Nvidia, the world’s most valuable company, will report its third-quarter earnings after Wall Street closes on Wednesday, a key demand test for chips and the sustainability of the AI euphoria.

Nvidia options implied an 8.5% swing for the shares in either direction following the results, according to data from options analytics service ORATS.

“Owing to the company’s massive size, (that) will influence how futures trade after Wall Street’s cash close and cause ripple effects going into the Asian open tomorrow morning,” said Kyle Rodda, senior financial market analyst at Capital.com.

In Japan, many major chip-related shares edged down despite their U.S. peers rising on Tuesday ahead of Nvidia’s results, although losses narrowed during afternoon trade.

Tokyo Electron fell 0.6% to become the second-biggest drag on the Nikkei, behind insurance firm Tokio Marine Holdings, which fell 7%.

AI-focused startup investor SoftBank Group shed 0.4%.

Meanwhile, Advantest, which counts Nvidia among its customers, rebounded to add 1.1%.

Shares of Seven & I Holdings jumped 6.5% following a report that the founding family was aiming to take the retailer private this financial year.

Tech and entertainment conglomerate Sony Group gained 2.8%. Reuters reported on Tuesday that Sony was in talks to acquire the publishing, anime and gaming powerhouse Kadokawa Corp. Shares of Kadokawa finished up about 16% on Wednesday.

Among other individual stocks, Tokyo Gas surged as much as 15% after a regulatory filing showed on Tuesday that U.S. activist investor Elliott Management had taken a 5.03% stake in the company. It ended up 13% to become the biggest percentage gainer in the Nikkei.