Nikkei surged over 2% in the morning session, backed by major tech shares recording gains on Wall Street. The Nikkei morning session was closed at 50,402.39, gaining 1.81%. Resonac Holdings topped the Nikkei gainers with a 7.8% jump, followed by AI-linked materials maker Mitsui Kinzoku, which climbed 7.7%. The tech giants riding on the Artificial Intelligence (AI) hype traded higher in the U.S., adding a bullish sentiment to Nikkei. NVIDIA Corporation (NVDA) closed at 180.99, edging up by 3.93%. Micron Technology, Inc. (MU) ended the previous session at 265.92, 6.99% up. While SoftBank Group Corp. (Nasdaq: SFTBY) climbed 2% higher to 55.31. U.S. stocks are also faring well, with the S&P 500 trading at 6,911.00, 0.34% up at press time, and the Dow Jones Industrial Average last traded at $ 48,532, climbing 0.14% higher. The Nasdaq 100 was up at 25,709.00.
Yield of government bonds in Japan rose against a backdrop of elevated interest rates. The yen had briefly slipped against the dollar but has regained its footing as Japan’s top diplomat has assured the market that appropriate steps would be taken against excessive moves.
As the yen slid to a one-month low near 158 per dollar on Friday, Vice Finance Minister Atsushi Mimura and Chief Cabinet Secretary Minoru Kihara said exchange rates should move in a stable manner reflecting economic fundamentals, adding that authorities were prepared to respond to speculative-driven moves. At the time of writing, the yen strengthened to 157.47 per dollar. The euro slipped slightly to 184.70 yen.
Bond Yield Rises to 26-Year High Amid Financial Tightening
The Japanese 10-year government bond yield rose to 2.072%, a 26-year high. The current yield is the highest since 1999. The yield was attributed to the interest rate hike by the Bank of Japan (BOJ). BOJ hiked the interest rate to 0.75% on Friday, December 18. The current rate is the highest in the past three decades. The upward trend in bond yield is likely to sustain if the financial tightening continues. Governor Kazuo Ueda said that the central bank would pursue further interest rate hikes if economic growth and inflation evolve as projected, adding that confidence in the outlook is strengthening. Yet, the increasing borrowing cost in Japan has created concerns over global liquidity, with the yen carry trade under threat.
Tech Stocks Surge, Lifting Wall Street & Nikkei
With a shorter holiday trading week ahead, the tech majors are thriving on Wall Street. Leading the charge, Jensen Huang-led NVIDIA (NVDA) maintains the bullish targets within a range of $220 to $320. Analysts at Morgan Stanley and JPMorgan maintain a ‘buy’ rating for the leading chip maker. U.S. President Donald Trump gave a green signal to NVIDIA to sell its second-most-powerful chips to China, a significant market for the company. NVIDIA shares were up 1.15% at $183.07 in premarket trade as of 4:42 a.m. EST. The impressive earnings reports lifted Micron Technology, Inc. (MU) up along with the broader market.
Nevertheless, the fears of tech overvaluation remain as a concern, casting a shadow over hopes for a Santa Claus Rally. For instance, despite the slight recovery, Oracle (ORCL)is facing mixed investor sentiment as heavy AI-related investments and a large bond issuance raise concerns about rising debt, even as its strategic OpenAI partnership offers long-term growth potential. While the stock has been volatile, Oracle’s role in OpenAI’s data center expansion and its involvement in TikTok’s U.S. operations highlight both the risks and opportunities tied to its expanding presence in AI.
