Nikkei hits record high on earnings, Middle East optimism

[TOKYO] Japan’s Nikkei climbed to a record high on Monday, underpinned by optimism over corporate earnings and a glimmer of hope after a report on a new proposal to end the Middle East conflict.

The benchmark Nikkei 225 Index advanced 1.38 per cent to 60,540.57, poised to close over the key 60,000 mark for the first time. The broader Topix climbed 0.77 per cent to 3,745.37.

Major indexes on Wall Street closed at record highs on Friday after Intel beat its earnings estimate, helped by surging demand in the artificial intelligence sector. The Philadelphia SE Semiconductor Index extended its record run of gains to 18 consecutive sessions.

Shares of Japanese factory automation provider Keyence and industrial robot maker Fanuc soared more than 15 per cent, leading gains in the Nikkei after both firms reported better-than-expected profit after the bell on Friday.

“Stocks related to earnings announcements, as well as AI and semiconductor-related shares, led the market higher at the open,” said Maki Sawada, an equities strategist at Nomura Securities.

“This week will see a steady stream of earnings reports from major companies in both Japan and the US, so market attention will naturally gravitate toward those results.”

“Since 60,000 is a psychological milestone, many investors are likely keeping an eye on that level, so profit-taking could manifest around that range,” she added.

The Nikkei fell into negative territory shortly after the open, but then rallied sharply following an Axios report that Iran has given the United States a new proposal to end their war. Discussions to settle the two-month-long conflict were stalled over the weekend.

There were 124 advancers in the Nikkei index against 100 decliners. After Keyence and Fanuc, SMC was the third-biggest gainer, up 9.3 per cent, after Reuters reported that activist fund Palliser Capital had made a “significant” investment in the factory automation company.

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Rohm was among the steepest decliners, falling 7.8 per cent after auto parts maker Denso Corp said it was considering withdrawing its takeover offer for the firm. REUTERS