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Japan’s Nikkei index hits record high as tech rallies on AI hype

February 22, 2024 5:12 AM

Investing.com-- Japan’s Nikkei 225 index hit an intraday record high on Thursday, buoyed chiefly by gains in the technology sector as hype over artificial intelligence spurred a rally in major chip stocks.


The Nikkei 225 jumped 1.8% to a record intraday high of 39,001.50 points, crossing a peak last seen in 1989, before the unwinding of a massive speculative bubble in Japan.


The broader TOPIX index rose 1% and was also in sight of a record high.


Gains on the Nikkei were driven chiefly by heavyweight technology stocks, as consensus-beating fourth-quarter earnings from AI darling NVIDIA Corporation (NASDAQ: NVDA) drummed up hype over an AI-led boost for the sector in the coming months.


Chipmakers and chip-adjacent stocks were among the top performers on the Nikkei. Advantest Corp. (TYO:6857)- which is also an Nvidia supplier- rose 4.2%, while Tokyo Electron Ltd. (TYO:8035)- Japan’s most valuable chipmaker- rose 3.4%. Chipmaker Dainippon Screen Mfg. Co., Ltd. (TYO:7735) was the top gainer on the Nikkei with a 7.8% surge.


SoftBank Group Corp. (TYO:9984), which is exposed to the chipmaking sector through its British chip designing unit Arm Holdings (NASDAQ: ARM), surged 4.3%. Arm jumped nearly 8% in aftermarket trade, tracking gains in Nvidia.


The Nikkei had initially curbed some gains after purchasing managers index data showed both manufacturing and services activity worsened in February, ramping up concerns over slowing Japanese economic growth.


But weakness in the Japanese economy is expected to largely delay the Bank of Japan's plans to begin raising interest rates. An ultra-dovish BOJ was a key point of support for Japanese stocks over the past two years.


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