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Japan's Nikkei 225 makes historic leap, breaches 40,000 level for first time as tech stocks surge

Shares in Japan have tracked gains in other markets driven by expectations for strong demand for technology associated with artificial intelligence.

Arushi Jaiswal Edited By: Arushi Jaiswal @JaiswalArushi Tokyo Published on: March 04, 2024 10:55 IST
Japan's Nikkei share
Image Source : REUTERS A man uses his smartphone in front of an electronic screen displaying Japan's Nikkei share

Japan's main stock index, the Nikkei 225, has achieved a historic milestone by surpassing the 40,000 mark for the first time on Monday, continuing a rapid rise to new peaks this year that has been spurred by corporate governance reform and cheap valuations.

Driven by a surge in technology shares mirroring their counterparts in the US, the Nikkei share average climbed 0.79% to reach 40,226.83 by midday, surpassing the previous intraday high of 39,990.23 recorded on Friday.

Masahiro Ichikawa Chief market strategist at Sumitomo Mitsui DS Asset Management said that overseas investors appear to be leading the buying and many seem to be investing from a medium- to long-term perspective. "I think the market will continue to rise," he said.

Why tech shares were boosted?

Japanese technology shares experienced a boost, fueled by the ongoing rally in artificial intelligence within US stocks, which propelled the S&P 500 and Nasdaq to record highs on Friday.

Advantest, a chip-testing equipment maker with US artificial intelligence firm Nvidia among its customers, saw a rise of 3.9%. Similarly, Tokyo Electron, a chip-making equipment giant, experienced a gain of 2.7%.

The shares of these two companies contributed a total of 175 index points to the Nikkei's 316-point increase during the morning session.

Shin-Etsu Chemical, opens new tab, which manufactures semiconductor silicon products, rose 2.2%.

JSR Corp, a significant producer of photoresists utilized in chip manufacturing, surged 4.4% following a media report indicating that state-backed fund Japan Investment Corp (JIC) intends to initiate a tender offer for the shares this month.

The broader Topix index increased by 0.16% to 2,713.79.

Among the Tokyo Stock Exchange's 33 industry sectors, electric machinery was the third-largest gainer, rising by 1.2%, following pulp and paper firms which climbed 2.1%, and miners which saw a 1.3% increase.

(With Reuters inputs)

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