Japan’s Nikkei rises but caution before US earnings caps gains

Japan’s Nikkei share average rose on Tuesday, buoyed by Wall Street’s rally overnight, although concerns about big tech earnings and tensions in the Middle East capped gainsو Reuters reported.

The Nikkei had climbed 0.27% to 37,538.06 by the midday recess and was on course for a second session of gains after slumping to a 10-week low on Friday.

Trading was choppy on Tuesday, with the index gaining 1% before retreating briefly into negative territory amid some volatility in chip shares.

The broader Topix ended the morning session 0.15% higher, with a value share sub-index gaining 0.21% to outpace a 0.08% rise in growth shares.

All three of the main U.S. stock benchmarks rallied on Monday, rebounding from big losses the previous week.

However, Tesla shares dropped 3.4% following price cuts in a number of its major markets. The electric vehicle maker is one of the so-called Magnificent Seven group of tech giants that will report earnings this week, along with Meta Platforms, Alphabet and Microsoft.

“In terms of recent trends, Japan’s stock market appears to be heavily influenced by overseas factors,” said Shoki Omori, chief Japan desk strategist at Mizuho Securities.

“This week, not only will the Magnificent Seven release their earnings, but other major companies will as well,” he said. “I think earnings are going to come out on the weaker side, which could push the Nikkei down to 37,000.”

The Nikkei rose to an all-time high of 41,087.75 a month ago before retreating sharply to as low as 36,733.06 by Friday.

Among notable chip-sector names, Tokyo Electron edged up 0.06% and Advantest added 0.25%. However, Lasertec was the biggest drag with a 2.81% slide and silicon specialist Sumco dropped 2.29%.