Japan’s Nikkei share average concluded the trading day on a positive note on Tuesday, buoyed by a rebound in chip-related heavyweights that had suffered significant losses in the preceding session. The Nikkei closed up 2.17% at 65,416.63. The index experienced a decline of 3.85% on Monday, marking its most significant one-day loss in the past three months. The Nikkei exhibited volatility earlier in the session, declining by as much as 0.16%. The broader Topix increased by 1.14%, reaching a level of 3,896.11.

Chip-making equipment manufacturer Tokyo Electron experienced an increase of 8.91%, while chip-testing equipment producer Advantest saw a rise of 4.34%, contributing significantly to the overall gain of the Nikkei. Meanwhile, technology investor SoftBank Group and fibre optic cable maker Fujikura reversed earlier losses and ended 1.03% and 2.23% higher, respectively. “Confidence in AI-related shares remains robust; however, there is a sense of caution regarding the rapid rally observed in the market earlier in the session,” stated Kazuaki Shimada. “Investors may have divested from stocks to generate capital for acquiring SpaceX in anticipation of its initial public offering this week,” he noted.

The Nikkei surpassed 68,000, reaching a record high earlier this month, driven by optimism surrounding the growth of AI-related shares. The index has experienced an increase of nearly 30% thus far this year. Monday’s significant sell-off came on the heels of pronounced declines in U.S. technology stocks observed at the conclusion of the previous week. Financials experienced an uptick on Tuesday as the market prepared for the anticipated interest rate hike by the Bank of Japan during its upcoming policy meeting next week.

Mitsubishi UFJ Financial Group increased by 0.38%, while Mizuho Financial Group experienced a rise of 1.69%. Meanwhile, Uniqlo-brand owner Fast Retailing fell 0.96%, exerting the most significant downward pressure on the Nikkei. Among the over 1,500 stocks listed on the prime market of the Tokyo Stock Exchange, 53% experienced an increase, 42% saw a decline, and 3% remained unchanged.