Japan’s Nikkei share average experienced an uptick on Thursday, driven by chip-related stocks that mirrored the upward movement of their U.S. counterparts from the previous night. However, the potential for an early rate hike from the Bank of Japan constrained the extent of these gains. The Nikkei increased by 0.47% to 66,424.44 at the midday break, while the broader Topix rose by 0.39% to 4,048.79. Overnight, the Philadelphia SE Semiconductor index, a reference for the Nikkei, concluded with a gain of 0.4%.

Alphabet announced its expectation to allocate between $195 billion and $205 billion for capital expenditures, an increase from the previously outlined range of $180 billion to $190 billion for the current year. “Sentiment improved after Alphabet raised its outlook for investments, and U.S. chip stocks ⁠inched up,” stated Shuutarou Yasuda. “On the other hand, bets that the ⁠BOJ may raise interest rates early hurt sentiment. Until now, the central bank tried to support the economy while raising rates, but that stance may change, which is negative for stocks led by domestic demand.”

In Japan, shares associated with chips experienced an uptick, highlighted by Advantest’s increase of 4.31%. Tokyo Electron increased by 0.45%, while technology investor SoftBank Group saw a rise of 2.09%. Memory maker Kioxia experienced a modest increase of 0.76%. Bank shares experienced an uptick as Japanese government bond yields surged, driven by expectations of an impending rate hike.

Mizuho Financial Group increased by 2.9%, emerging as the leading percentage gainer on the Nikkei. Sumitomo Mitsui Financial Group and Mitsubishi UFJ Financial Group both experienced gains of nearly 2% each. Shares of retailers, buoyed by domestic demand, experienced a decline, with Takashimaya, Isetan Mitsukoshi Holdings, and Seven & i Holdings each falling by over 2%. Of approximately 1,500 stocks listed on the prime market of the Tokyo Stock Exchange, 41% experienced an increase, 55% saw a decline, and 3% remained unchanged.