TOKYO - Tokyo stocks extended their recovery on Wednesday, November 11th, with the Nikkei 225 closing at 61,248.59 points as of 3:30 p.m., up 789.01 points, or 1.31%, from Tuesday, marking a third consecutive session of gains as investors bought semiconductor and artificial intelligence-related shares despite renewed concerns over US inflation and interest rates.
The advance followed a 1,684-point surge on Tuesday, when the benchmark regained the psychologically important 60,000-point level after a sharp selloff late last week. Wednesday's gains brought the Nikkei's three-day recovery to more than 3,800 points, although the index remained below its November 5th closing level of 61,077.90 only until it moved above that mark during the session.
Semiconductor-related stocks were the principal drivers of Wednesday's rally, with Advantest contributing approximately 378 points to the Nikkei's advance, followed by Tokyo Electron at about 135 points and Ibiden at nearly 68 points. TDK and memory chip manufacturer Kioxia also provided significant support, reflecting continued investor confidence in demand for advanced computing equipment and components used in artificial intelligence systems.
The buying came despite weakness on Wall Street overnight, where stronger-than-expected US consumer inflation figures raised concerns that the Federal Reserve could maintain restrictive monetary policy or consider further interest rate increases. The Dow Jones Industrial Average fell 157.86 points to 52,231.89 on Tuesday, while the Nasdaq Composite declined 187.26 points to 25,065.88.
Trading in Tokyo began cautiously, with the Nikkei opening just 65.72 points higher at 60,525.30. The index briefly came under selling pressure before semiconductor stocks attracted renewed buying, lifting the benchmark above 61,000 during the morning session. Gains accelerated after the midday break, with the index reaching an intraday high of 61,366.25.
The recovery was not limited to technology stocks. Of the Tokyo Stock Exchange's 33 industry groups, 20 finished higher, led by textiles, electrical equipment, banking and nonferrous metals. Rubber products, land transportation and airlines were among the weaker sectors, demonstrating that investors remained selective despite the broader improvement in market sentiment.
Among individual companies, Fast Retailing, the operator of Uniqlo, was the largest negative contributor to the Nikkei, reducing the index by approximately 88 points. Konami Group, Recruit Holdings, Honda Motor and telecommunications company KDDI also weighed on the benchmark.
Market breadth was moderately positive on the Tokyo Stock Exchange's Prime Market, where 834 stocks advanced, 666 declined and 45 remained unchanged.
The broader Topix index also advanced, closing at 3,929.39 points, up 35.68 points, or 0.92%, from Tuesday. Its performance indicated that the recovery was spreading beyond the semiconductor companies that have dominated market movements in recent months.
In currency trading, the yen weakened against the US dollar, trading around 158.80 to 158.90 yen during Wednesday's afternoon session, compared with approximately 158.04 yen at Tuesday's Tokyo market close. The dollar's strength reflected rising US Treasury yields following the unexpectedly strong inflation figures, while the weaker yen provided additional support for Japanese exporters by improving the value of overseas earnings when converted into Japanese currency.
Attention also turned to Japan's latest corporate confidence figures, which showed that manufacturers were becoming increasingly optimistic about business conditions. The Reuters Tankan survey released Wednesday found that sentiment among major Japanese manufacturers rose to plus 27 in November from plus 22 in October, reaching its highest level since August 2021.
Confidence among electronics manufacturers climbed particularly sharply, rising to plus 39 from plus 25, supported by strong demand for semiconductors, including memory chips used in artificial intelligence applications. Sentiment among precision machinery manufacturers also improved, while chemicals, oil refining and ceramics companies reported more favorable business conditions.
The outlook for Japan's services sector strengthened even further, with the nonmanufacturing sentiment index jumping to plus 35 from plus 23, its highest reading since June 2018. Information and communications companies benefited from strong orders, while services businesses reported sustained demand for workers. However, companies continued to identify rising costs, higher interest rates and difficulties passing expenses on to customers as significant challenges.
Corporate earnings remained another important focus following SoftBank Group's announcement on Tuesday of a net loss of approximately 1.1 trillion yen for the July-September quarter, reversing a profit of about 2.5 trillion yen a year earlier. The results highlighted the financial pressures associated with the technology investment company's aggressive expansion into artificial intelligence infrastructure, including data centers and its substantial investment in OpenAI.
SoftBank's quarterly financing costs more than doubled from a year earlier to 462 billion yen, while changes to planned US data center projects resulted in a multibillion-dollar charge. The figures intensified scrutiny of the company's borrowing and investment strategy at a time when global investors are becoming more cautious about the pace of returns from artificial intelligence spending.
In the automotive sector, Nissan Motor reported its latest earnings after Wednesday's stock market close, announcing a net loss of 39.7 billion yen for the April-September period, substantially narrower than the 221.9 billion yen loss recorded a year earlier. Revenue increased 8.8% to approximately 6.07 trillion yen, while operating profit improved to 80 billion yen from an operating loss of 27.7 billion yen.
The improvement reflected cost reductions and restructuring measures under Chief Executive Ivan Espinosa, although Nissan's July-September operating profit plunged to just 2.1 billion yen from 51.5 billion yen a year earlier, demonstrating the difficulties facing the automaker's turnaround.
Nissan maintained its full-year operating profit forecast of 200 billion yen but reduced its global vehicle sales outlook to between 2.97 million and 3 million units, compared with its previous estimate of 3.15 million. The company cited increasingly difficult conditions in China, where competition from electric vehicle manufacturers continues to intensify, while sales in Japan and the United States have shown greater resilience.
The latest results underline the contrasting forces shaping Japan's corporate sector, with technology companies benefiting from expanding investment in artificial intelligence while traditional manufacturers face mounting competitive pressures and rising operating costs.
For investors, the immediate question is whether the Nikkei's recovery can continue after three consecutive sessions of gains. Strong semiconductor demand, improving business confidence and a weaker yen are providing support, but the prospect of higher US interest rates, volatility in technology valuations and uncertainty over corporate earnings remain potential obstacles to further advances.
