Japan’s Nikkei tops 32,000 for first time in two weeks as chips shine

Japan’s Nikkei share average crossed the key psychological 32,000 mark on Thursday for the first time in two weeks amid bets for an end to the Federal Reserve’s monetary tightening cycle and a peak in U.S. bond yields, Reuters reported.

Chip-related shares were among the top gainers on the benchmark index, as growth stocks benefited from anticipation of lower borrowing costs.

The Fed left rates unchanged in a policy decision on Wednesday, with investors taking Chair Jerome Powell’s measured tone on another interest rate hike as dovish.

“The whole world has been waiting for the Fed to slow down, to pause, to signal that they’re done,” said Steen Jakobsen, Saxo Bank’s chief investment officer, in an interview in Tokyo.

A peak in Fed rates could help lift the Nikkei as high as 34,000 by year-end, Jakobsen said.

“I think it could be a happy Christmas for Nikkei.”

The Nikkei ended the day up 1.1% at 31,949.89, after hitting 32,087.13 for the first time since Oct. 18 earlier.

The broader Topix added 0.51%.

The outperformance for tech was clear from a 1.07% jump for a Topix index of growth shares, while a value share index finished flat.

The Mothers index of start-ups soared 3.4%.

For the week, the Nikkei gained 3.09%. Japanese markets will be closed for a public holiday on Friday.

Chip-testing equipment maker Advantest, which is one of Jakobsen’s top three Japan stock picks, surged 10% to be the Nikkei’s top percentage and points gainer for a second day.

Jakobsen also singled out Shin-Etsu Chemical, because of its role in the semi-conductor supply chain, and Nintendo. The stocks were up 4.12% and 0.74% on Thursday, respectively.

Other chip-related stocks seeing outsized gains included Screen Holdings, which rose 7.7%, and Renesas Electronics, which added 5.34%.

Another standout was sauce maker Kikkoman, which rallied 8.05% after announcing a share buyback.