Nikkei Climbs 850 Points as Chip Shares and Dividend Buying Lift Tokyo

On September 25, Japanese stocks experienced a significant surge, with the Nikkei 225 closing at 66,364, up 850 points. This rally was fueled by increased buying in semiconductor and artificial intelligence-related shares, alongside demand for dividend-paying financial stocks ahead of the September 28 interim dividend deadline. The broader TOPIX also rose, climbing 53.29 points to 4,128.59, indicating a more widespread market rally compared to the previous day's performance.

The Nikkei's rise marked its fifth consecutive session of gains, extending its recovery from the mid-September selloff and firmly breaking above the 66,000 level. Initially, the index opened at 65,640, up 125 points, but momentum quickly built throughout the day. By midday, the Nikkei had gained 804 points, reaching 66,318, and continued its upward trajectory in the afternoon, closing at 66,364.

Notably, this rally followed a day when U.S. semiconductor shares underperformed, suggesting that local positioning, a weak yen, and dividend demand played a more crucial role than the overnight U.S. market's lead. Tokyo Electron, a chip-equipment maker, was the primary driver of the Nikkei's gain, adding about 220 points to the index.

Advantest also made a significant contribution, adding around 188 points. Other major contributors included Ibiden, Fast Retailing, Recruit Holdings, Kioxia Holdings, and Kyocera, reflecting the rally's focus on AI, semiconductors, high-priced index names, and selected technology-linked companies.

The rally was characterized by a shift from narrow high-priced technology stocks to a broader range of financial and industrial shares. Kioxia's shares, which have been volatile since July, gained significantly, indicating renewed investor interest in the memory sector, a key component of AI infrastructure. Other relevant stocks that saw strong buying included Ibiden, Fast Retailing, Recruit Holdings, Kioxia Holdings, and Kyocera.

While several electronic component and semiconductor-related companies, such as Murata Manufacturing, TDK, Taiyo Yuden, Lasertec, Screen Holdings, Fujikura, Sony Group, and Komatsu, were also in the gainers' list, SoftBank Group was an exception, underperforming due to concerns over delays in Oracle data-center power supply projects.

This selective buying approach highlighted investors' growing caution within the AI sector, focusing on companies with strong earnings visibility, favorable valuations, and manageable funding needs. The sector's recovery was further supported by the performance of the bank sector, which saw a 3.23% rise among the Tokyo Stock Exchange's 33 industry groups, driven by high dividend payouts and expectations of higher interest rates, which could improve bank lending margins and investment income.