Nikkei gives up early gains after chip industry-related stocks decline

On Thursday, the Japanese Nikkei index struggled to maintain its early gains and ultimately closed lower, primarily due to a decline in shares of companies associated with the chip industry. Tokyo Electron shares, in particular, faced selling pressure following disappointing annual revenue estimates from British chip design company Arm Holdings, which fell below market expectations.

The Nikkei index ended the day down 0.34 percent at 38,073.98 points, retracing from an initial increase of 0.5 percent earlier in the session. Shuji Hosui, chief strategist at Daiwa Securities, noted that the declines in Arm Holdings’ revenue estimates triggered widespread selling in Tokyo Electron shares and other chip-related stocks.

Arm Holdings reported full-year revenue estimates that fell short of expectations, leading its Frankfurt-listed stock to plummet by approximately 10 percent on Thursday. Consequently, shares of Tokyo Electron, a Japanese company specializing in chip manufacturing equipment, also declined by around three percent, exerting significant influence on the Nikkei index.

SoftBank Group, which holds a substantial stake in Arm Holdings, witnessed a similar decline of about three percent in its shares.

On a positive note, the broader Topix index managed to close 0.26 percent higher at 2,713.46 points.

In the Tokyo Stock Exchange’s main market, out of more than 1,600 listed companies, 1,081 stocks registered gains, while 519 stocks experienced declines.

Additionally, the summary of the Bank of Japan’s monetary policy meeting in April revealed a hawkish sentiment, with many members advocating for a gradual increase in interest rates. This stance contributed to an uptick in the yield on 10-year Japanese government bonds, reaching 0.91 percent, its highest level since April 26.