Tokyo Equity Market Stabilizes on Semiconductor Strength

The Nikkei 225 closed at 65,270.95 on the Tokyo Stock Exchange, gaining 128.17 points despite a volatile session. The index had fallen more than 900 points during the morning trade before recovering on afternoon buying. This rebound was primarily fueled by strength in the semiconductor sector, following a previous day of gains in U.S. chip stocks. The TOPIX also finished higher, rising 7.94 points to 4,054.58, with total trading volume reaching 2.168 billion shares.

Morning sentiment deteriorated as U.S. long-term interest rates climbed, raising inflation concerns and making bonds more attractive than equities. Simultaneously, crude oil prices spiked due to escalating hostilities between the U.S. and Iran. These factors pushed the Nikkei below the 65,000 level, with the morning close registering a loss of 545.32 points. Investors feared that sustained high energy costs would erode corporate earnings and consumer spending, prompting initial selling pressure across the board.

Advantest Drives Afternoon Recovery

The market trajectory shifted in the afternoon as bargain-hunting buyers entered the market. Advantest, a key semiconductor testing equipment manufacturer with significant weight in the Nikkei, attracted substantial buying interest. This demand for chip-related names helped narrow the index's losses. As selling pressure subsided, broader participation in equity purchases allowed the market to close in positive territory, effectively erasing the morning declines.

Energy Costs Cap Upside Potential

Despite the recovery, elevated crude oil prices remained a constraint on further gains. Market participants expressed caution regarding the persistence of Middle East tensions, which could keep energy prices high. Such conditions pose a direct threat to profit margins for energy-intensive companies and reduce disposable income for consumers. This underlying risk prevented a stronger rally, as investors remained wary of potential earnings downgrades across multiple sectors.

Geopolitics and Policy Drive Outlook

Nervous trading is expected to continue as conflicting forces intersect. Positive momentum in the semiconductor sector is currently counterbalanced by geopolitical risks and uncertainty surrounding U.S. monetary policy. According to reports from GN stocks/chips, the market remains sensitive to developments in both regions. Any further escalation in the Middle East or hawkish signals from the Federal Reserve could trigger renewed selling pressure, potentially testing lower price levels in the near term.