Nikkei rises on boost from chip and energy shares

October 3, 2022: Japan’s Nikkei share average rose on Monday, recovering from early losses as chip-related stocks rallied and energy shares tracked gains in crude oil prices.

The market’s mood was also buoyed by Japan Inc’s plans to boost capex this fiscal year in a quarterly Bank of Japan (BOJ) survey of corporate sentiment.

The Nikkei ended the morning session 0.67% higher at 26,111.54, recovering from early declines of as much as 1.22%.

The broader Topix gained 0.26% to 1,840.71, rebounding from losses as steep as 1.12%. Both indexes posted their worst month in September since the COVID-19 pandemic first rocked markets 2-1/2 years ago.

Although the BOJ’s “tankan” survey showed a worsening of business mood amid heated inflation, big manufacturers expect an improved environment three months from now and plan to increase capital expenditure by 21.5%.

“My impression of this tankan survey is positive,” said Kenji Abe, an equity strategist at Daiwa Securities.

It shows companies are raising prices and expect a weaker yen, which will boost exporters, he said. “It suggests some positive numbers for Japanese corporate earnings going forward,” he added.

Abe predicts the Nikkei will rise toward 27,000 over the course of this month. Energy was the Nikkei’s best-performing sector on Monday, climbing 1.94% as crude prices rallied more than 3% amid talk of OPEC+ production cuts this week.

The Nikkei’s biggest mover by index points was chipmaking-equipment maker Tokyo Electron, which added 53 points with a 4.17% advance.

That’s after chipmaker Mimasu Semiconductor Industry Co, which is not listed on the Nikkei, jumped 11.6% on the back of a strong forecast for earnings this fiscal year.

Chip-related stocks Advantest and Renesas jumped 3.88% and 3.0%, respectively.

Reuters