Nikkei Gains Nearly 700 Points as Chipmakers Lead Tokyo Market

Japanese stocks experienced a notable recovery on October 28, with the Nikkei 225 index surging to close at 63,954.19, marking a 1.08% gain from the previous session. The rally was primarily driven by artificial intelligence-related semiconductor shares, highlighting the growing influence of semiconductor manufacturers and equipment suppliers on Japan's equity market.

Advantest, Tokyo Electron, and SoftBank Group were the top contributors to the Nikkei's positive movement, each adding significant points to the index. The broader TOPIX index, however, saw a decline of 0.14%. The divergent performances underscored how a limited number of heavily weighted technology companies were masking weakness in the broader market.

The recovery came after a rough start to October, with Japanese equities falling sharply from their October 26 highs. While some sectors like Konami Group, Canon, and Nitto Denko faced declines, the technology-heavy Nasdaq Composite's previous day gain of 1.18% bolstered expectations of continued demand for Japanese semiconductor equipment, memory chips, and advanced electronic components.

The yen showed slight strengthening against the dollar and euro, while traders remained cautious ahead of key interest rate decisions from the Federal Reserve and the Bank of Japan. Advantest's decision to raise its earnings forecast for the fiscal year ending March 2027, citing accelerating global demand for semiconductor testing equipment in AI applications, further reinforced the positive sentiment.