TSE – Tokyo stocks extend gains on bullish chip buying

Tokyo stocks continued to advance Wednesday, lifted by strong demand for semiconductor and other electronic parts issues.

The Nikkei average of 225 selected issues listed on the first section of the Tokyo Stock Exchange soared 292.25 points, or 1.04%, to close at 28,456.59 in a four-session bull run, after scoring a modest gain of 25.31 points Tuesday.

The TOPIX index of all first-section issues climbed 6.46 points, or 0.35%, to 1,864.40, stretching its winning-streak to a fifth trading day following a 3.00-point rise the previous day.

The market struggled for direction until around midmorning, sandwiched between buying prompted by a Wall Street rebound Tuesday and selling to lock in gains so far in the ongoing rally.

But stocks in the semiconductor sector began attracting vigorous purchases toward noon, helping both the Nikkei and TOPIX indexes extend gains, brokers said.

“Behind the chip sector’s popularity is high demand for semiconductors amid a global supply shortage,” said Masayuki Otani, chief market analyst at Securities Japan Inc.

Hirohumi Yamamoto, strategist at Toyo Securities Co., noted that chip buying gathered steam after selling out of concerns over the planned extension of a coronavirus emergency causing an economic slowdown in Japan ran its course.

Some investors refrained from active transactions ahead of U.S. President-elect Joe Biden’s announcement of his administration’s coronavirus response policy and Federal Reserve Chairman Jerome Powell’s speech, both slated for Thursday, other market sources said.

On the TSE first section, gainers outnumbered decliners 1,232 to 856 while 98 issues were unchanged. Volume fell to 1.23 billion shares from Tuesday’s 1.33 billion shares.

In the semiconductor sector, Advantest jumped 5.45%, Tokyo Electron 5.27% and TDK 4.33%.

Industrial robot maker Yaskawa Electric attracted buying after posting rosier earnings projections for the year ending next month.

Oil stocks including ENEOS and Impex were boosted by a rise in crude oil prices.

On the other hand, power and gas utilities turned down.

Among other losers, optical equipment maker Olympus dropped 3.68%.

In index futures trading on the Osaka Exchange, the key March contract on the Nikkei average rose 270 points to 28,460.