Nikkei dips ahead of Nvidia earnings: market update

The Nikkei’s climb halted amidst market concerns prior to Nvidia’s earnings report, with Japan’s main stock index wrapping up lower for a second consecutive day on Wednesday. Traders hesitated near an all-time peak, pondering whether the forthcoming financials from U.S. chipmaker Nvidia would validate the recent enthusiasm for AI in global markets.

The Nikkei share average, after recovering some of its early losses, ultimately closed down 0.26% at 38,262.16, as 124 of its 225 components saw declines.

In recent days, the benchmark index had been inching towards its historical high of 38,957.44, set on the final trading day of 1989 during Japan’s bubble economy zenith. Last Friday, the index climbed as high as 38,865.06 before a pullback at closing, leaving it approximately 700 points below the record.

The broader Topix index concluded the day down 0.19% at 2,627.3.

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The Nikkei’s progression toward its 35-year peak hit a snag due to Wall Street’s downturn. The U.S. market closed lower after Monday’s holiday, with investors anxious about whether Nvidia’s quarterly results would support its lofty valuation. The Philadelphia semiconductor index fell over 1% as Nvidia and other chip stocks stumbled.

Tech-related shares on the Nikkei also dipped, with Advantest, a chip-testing equipment manufacturer with Nvidia as a client, falling about 2%. Tokyo Electron, a major chip-making equipment company, dropped 0.38%, and Lasertec Corp, involved in chip-related equipment production, slid 1.89%.

SoftBank Group, known for its investments in AI-focused startups, saw a decline of roughly 2%.

Sumitomo Mitsui DS Asset Management’s Chief Market Strategist Masahiro Ichikawa noted the substantial influence of Japan’s chip giants, which have ties to U.S. high-tech firms, on the Nikkei. He emphasized the significance of Nvidia’s revenue report, suggesting that disappointing results could push the Nikkei below 38,000 points, while positive surprises might propel it to new all-time highs.