Nikkei closes higher as chip stocks mirror US tech surge, Fast Retailing drags

Nikkei closes higher: Japan's Nikkei share average edged upwards on Friday, propelled by gains in chip-related stocks which mirrored the positive performance of US technology shares. However, the ascent was tempered by a decline in Fast Retailing, the parent company of Uniqlo.

The Nikkei closed with a modest rise of 0.21 per cent, settling at 39,523.55 points, marking a weekly gain of 1.41 per cent. Meanwhile, the broader Topix index added 0.46 per cent to reach 2,759.64 points, wrapping up the week with a 2.11 per cent increase.

Commenting on the market movement, Shigetoshi Kamada, General Manager at Tachibana Securities' research department, noted, "The Nasdaq displayed strength overnight, despite the uptick in US Treasury yields, instilling confidence among investors."

Thursday's upbeat close in US stocks, led by momentum in tech-related stocks, was fuelled by fresh economic data suggesting a potential easing of inflationary pressures. However, concerns lingered over climbing Treasury yields following a robust consumer price index reading earlier in the week.

Chip-related stocks in Japan saw gains, with notable increases in Tokyo Electron and Lasertec, up by 1.49 per cent and 2.97 per cent respectively. Advantest also registered a rise of 0.87 per cent.

On the corporate front, property developer Mitsui Fudosan witnessed a significant surge of 7.82 per cent after announcing plans for shareholder returns, including a substantial share buyback program totalling 40 billion yen ($261.22 million). This news buoyed its peers, with Tokyo Tatemono and Mitsubishi Estate recording jumps of 7.61 per cent and 6.92 per cent respectively. Consequently, the property index saw the most notable advancement among the Tokyo Stock Exchange's industry sub-indexes, climbing 5.2 per cent.

Kamada highlighted the market's anticipation of shareholder returns from cash-rich firms as the corporate earnings season approaches. Mitsui Fudosan's announcement served to heighten these expectations.

However, the day's gains were offset by Fast Retailing, which dropped 4.4 per cent and weighed heavily on the Nikkei. The decline followed the company's decision to maintain its full-year operating profit forecast, disappointing investor expectations.

Among the Nikkei's components, 157 stocks rose while 66 declined, with two remaining unchanged.

(With Reuters inputs)