Nikkei 225 Surges as Asian Chip Stocks Rally

The Nikkei 225 surged on Monday, tracking a broad rally across Japanese and South Korean semiconductor stocks.

The move follows a sharp rally in US chip stocks on Friday, and comes as investors keep betting on strong demand for AI-related hardware. Advantest, Tokyo Electron and Kioxia Holdings led gains in Tokyo, while South Korea's KOSPI posted an even sharper advance as Samsung Electronics and SK Hynix climbed alongside it.

Latest Market Moves

• The Nikkei 225 closed up 2.12% at 66,399.84 on Monday, though still around 9% off its record high near 72,800 struck in June.

• Japan’s Topix index added 0.8% to around 4,136.

• South Korea's KOSPI jumped 3.5% to 6,921.17, a fresh record for the index.

• The US Philadelphia Semiconductor Index rose more than 3% in New York on Friday, its strongest session in weeks, after stronger than expected US jobs data.

Chip Stocks Lead the Charge in Tokyo and Seoul

Chipmakers did the heavy lifting.

Advantest, which makes semiconductor testing equipment, and Tokyo Electron, a major supplier of chipmaking machinery, both climbed sharply in Tokyo on Monday. Kioxia Holdings and SoftBank Group also rallied, with investors continuing to price in strong demand for AI-related hardware.

The strength wasn't confined to Japan. In Seoul, Samsung Electronics and SK Hynix both jumped as memory chip demand tied to AI data centre buildouts remained a central theme for investors across the region.

Wall Street's Friday Chip Rally Set the Tone

The rally didn't start in Asia.

The Philadelphia Semiconductor Index jumped over 3% in New York on Friday after a stronger than expected US jobs report eased concerns about the health of the labour market. Nvidia, Marvell and AMD all rose sharply in the session, and that strength carried through into Monday's trading in Tokyo and Seoul.

Asian chip and hardware stocks are highly sensitive to sentiment on their US-listed peers, given how tightly the global semiconductor supply chain is linked, from Nvidia's AI chip designs to the memory and equipment makers in Japan and South Korea that supply and test them.

Nikkei 225: Uptrend Intact, but Watch for a Bigger Top

The chart shows the Nikkei 225 still working within its broader uptrend.

Price has been rising within a wide channel since April, and Monday's move pushed the index back above the short-term trendline connecting its August peak, a bullish signal for the near term. But the sequence of lower highs since the index's record near 72,800 in June leaves a head-and-shoulders top in play, with that level and the August peak forming the pattern's head and right shoulder, and the rising trendline back to April's lows acting as the neckline.

The 14-period RSI has climbed back into the low-60s, reflecting renewed momentum without yet flagging overbought conditions. A push through the June and August highs would go a long way to invalidating the topping pattern, while a break back below the rising trendline would confirm it and open the door to a deeper pullback.

Source: SpreadEx | Nikkei 225, 8-Hour Chart