Nikkei climbs to 5-week high, aided by chip-related firms, Apple suppliers

A pedestrian walks past a stock indicator board showing the share price of the Tokyo Stock Exchange in Tokyo on December 18, 2018. (AFP pic)

TOKYO: Japan’s Nikkei reached a five-week high on Friday as chip-related firms tracked sharp rises by US counterparts, while some investors awaited major events next week for direction.

The Nikkei share average rose 1.0% to 20,773.56, the highest closing level since Dec 19. The benchmark index gained 0.5% for the week.

Investors also sought buying opportunities in small-to-mid sized stocks, with the Mothers market rising 1.7%. It was the index’s third straight gain of more than 1%.

Chip-related stocks, which rallied on Thursday after investors took heart from Texas Instruments’ and Xilinx Inc’s earnings unveiled after Wednesday’s US market close, continued to soar as the results were welcomed on Wall Street.

“Investors who were already excited about the US chip sector’s earnings the day before got even more reassured after they saw how their stocks moved,” said Shogo Maekawa, a global market strategist at JPMorgan Asset Management.

Maekawa added that a recovery in the global cyclical chip sector is taken as a silver-lining amid concern about a global economic slowdown.

He said that investors will be focus on events next week, especially US-China trade talks

US Commerce Secretary Wilbur Ross said on Thursday that the United States and China are “miles and miles” from resolving trade issues but there is a fair chance the two countries will get a deal.

However, US Treasury Secretary Steven Mnuchin was somewhat more upbeat, saying the United States and China were “making a lot of progress” in talks, but he did not elaborate.

JP Morgan’s Maekawa said, “The market is cautious especially after comments from Ross.”

Silicon products maker Sumco Corp jumped 12%, Tokyo Electron rallied 4.7%, Advantest Corp surged 4.9%, while Shin-Estu Chemical soared 4.5%.

Traders said that the gains in the chip sector lifted sentiment in shares of Apple suppliers as well, with Murata Manufacturing surging 6.1% and Alps Alpine adding 5.2%.

The Philadelphia SE Semiconductor Index, under pressure in recent months after Apple warned of waning smartphone demand, saw its biggest one-day percentage gain since Dec. 26, advancing 5.7%.

Nissan Motor Co rose 2.5% after Renault appointed Michelin boss Jean-Dominique Senard as its new chairman, following the resignation of Carlos Ghosn in the wake of his arrest, which has rocked the French carmaker and its alliance with Nissan.

The broader Topix gained 0.9% to 1,566.10