Tokyo stocks rise, Nikkei up 2%, on further AI development hopes

Tokyo stocks advanced on Wednesday, with the Nikkei stock index surging more than 2%, propelled by optimism surrounding artificial intelligence and semiconductor-related sectors. The 225-share Nikkei Stock Average finished at 66,753.72, a 1.94% increase from Tuesday's close at 66,753.72. The wider Topix index added 67.52 points, or 1.67%, to close at 4,108.65.

Top-tier Prime Market stocks led the gains, with nonferrous metals, banking, and metal products performing well. The U.S. dollar briefly slipped to 156 yen, driven by domestic exporters' demand for yen, while concerns about potential currency manipulation by Japanese authorities loomed.

At 5 p.m., the dollar traded at 156.90-92 yen, slightly lower than the 157.23-33 yen level in New York and 157.37-39 yen in Tokyo the previous day. The euro was valued at $1.1345-1346 and 178.01-05 yen against $1.1335-1345 and 178.32-42 yen in New York, and $1.1349-1350 and 178.61-65 yen in Tokyo.

The benchmark 10-year Japanese government bond yield fell 0.025 percentage points from Tuesday's close to 3.060%, following a recent rally. Softbank Group led the winners, buoyed by a report suggesting that OpenAI, a significant investor, could be nearing $70 billion in annualized revenue, up from the $40 billion reported in August.

Boosted investor confidence was also fueled by TDK Corp. and Taiyo Yuden Co.'s agreement to initiate talks on a business alliance to jointly develop electronic components, in response to heightened demand stemming from the surge in AI data centers. Market strategist Masahiro Ichikawa of Sumitomo Mitsui DS Asset Management Co. cautioned that further de-escalation in Middle Eastern tensions and sustained declines in crude oil prices would be required for the Nikkei to stay above the 67,000 mark, a level the index has struggled to surpass.

He also noted that stabilization in bond yields would further encourage buying in AI- and chip-related shares.