Nikkei rises 1.8% as chip stocks rally on Fed rate-hike relief

Japan's Nikkei 225 rose 1.8% on Aug 12, led by chip and electronics stocks, as eased fears of further Fed rate increases lifted technology shares.

"Semiconductor-related names were the main drivers after Wall Street hit a record as traders dialed back expectations for more Federal Reserve rate hikes following weaker US jobs data," Daisuke Hashizume, a strategist at Daiwa Securities, said.

Advantest climbed 5.3%, Tokyo Electron rose 3.4% and Nvidia supplier Ibiden advanced 6.28%, while SoftBank Group slipped 1.22% to 5,484 yen. The broader Topix index added 0.44% to 4,092.93, a narrower gain than the Nikkei's, showing a handful of heavyweight technology names carried the session.

The rally extends a rebound that began after US July non-farm payrolls unexpectedly fell by 23,000, against expectations for an 80,000 increase, trimming September rate-hike odds to 44 percent from 67 percent a week earlier. Investors now turn to US July CPI due Aug 12 and PPI on Aug 13 for the next directional cue.

The move tracked an overnight advance in US technology shares, with all three major US indexes posting solid gains last week on the softer jobs data. South Korea's KOSPI rose 0.65% to 6,299.66, though it pared an intraday gain of more than 2 percent after the tech-heavy KOSDAQ triggered a sidecar mechanism that suspended program buy orders.

The yen remained under pressure against the dollar despite a rare joint intervention by US and Japanese authorities earlier in the week, keeping the currency outlook a key variable for export-heavy Nikkei constituents. Crude oil added a separate headwind, with WTI climbing about 5 percent to above $82 a barrel as uncertainty over the reopening of the Strait of Hormuz persisted, while the US 10-year Treasury yield edged toward 4.70 percent.

Kioxia rose 0.59% to 48,010 yen, while SK Hynix and Samsung Electronics slipped 0.14 percent and 0.43 percent respectively in Seoul, a split that showed the chip advance was not uniform across the region. The divergence between the Nikkei's outsized gain and the Topix's modest rise also pointed to thin participation, with trading volumes typically light during Japan's Obon holiday period.

The advance marks a sharp reversal from the prior week, when the Nikkei slipped 0.12% to 65,606.71 on Aug 7 as investors locked in profits on AI and semiconductor names after a summer run-up. That pullback, which included an intraday plunge of more than 1,000 points, had been driven by company-specific earnings disappointments at names such as Fujifilm and Lasertec alongside broader sector caution.

The rebound in chip shares suggests investors are treating the prior week's selloff as a consolidation within a longer-term uptrend rather than the start of a sustained reassessment of technology valuations. Longer-term structural optimism about Japan's role in the global semiconductor supply chain remains intact among many analysts, even as near-term catalysts have thinned with the earnings season winding down.

With the peak of Japan's earnings season now past, traders said the Nikkei's near-term path hinges on the US inflation prints this week and any further signals from the Bank of Japan on policy normalization. A stronger yen would weigh on exporter earnings, while a hotter CPI reading could revive rate-hike bets and reverse the chip-led advance. For now, the balance of risks favors further upside in technology shares, provided the inflation data does not derail the case for a September pause.

This article is for informational purposes only and does not constitute investment advice.