Nikkei 225 today: Why are investors worried despite the surge past 60,000?

Japan's Nikkei 225 climbed back above 60,000 on Tuesday as semiconductor shares rallied, although investors remained wary of the risks that sent the benchmark into bear-market territory last week.

The index rose 2.89% to 60,475.78 at the morning close, gaining 1,700 points after ending Monday at 58,775.50. Friday's 5.96% collapse had dragged it to 57,434.77, more than 20% below its June record.

SoftBank Group and chip-equipment makers led the rebound, encouraged by a sharp recovery on Wall Street and falling oil prices.

Yet concerns about potential US restrictions on AI infrastructure and stretched technology valuations remain unresolved, leaving investors questioning whether the rally can endure.

Nikkei 225 today: SoftBank and chipmakers lead the recovery

The immediate catalyst came from the US, where Monday's technology rebound restored some confidence after a punishing week.

The Nasdaq Composite gained 2.74%, the S&P 500 added 2.35% and the Philadelphia Semiconductor Index surged 6.85%.

SoftBank surged about 11.9% in early trading, while memory manufacturer Kioxia gained 6.9%.

Tokyo Electron advanced 5.8% and Advantest rose 5.3%, reflecting renewed demand for businesses supplying chips and equipment to the global technology industry.

Signs of possible progress in US-Iran diplomacy eased fears about energy costs and inflation, which have weighed on interest-rate expectations.

Hideyuki Ishiguro of Nomura Asset Management told Bloomberg that investors were taking a more measured view of possible AI regulation. Greater clarity on US policy could encourage further buying, he suggested.

Japan stock market today: Why AI investment fears still matter

The sell-off followed Democratic victories in the US midterm elections, which raised concerns that tougher oversight could delay construction of energy-intensive AI data centres.

Such delays matter for Japanese companies whose prospects depend on continued investment in computing capacity.

SoftBank has extensive AI exposure, while Advantest and Tokyo Electron supply equipment used throughout semiconductor production.

Investors are now asking whether they overreacted. A postponed data centre could delay equipment orders without eliminating them. That would be less damaging than a widespread cancellation of projects.

But timing still matters. Delayed spending can push revenues into later periods, increase financing costs and undermine valuations based on rapid earnings growth.

“Wariness about US policy moves such as AI regulation runs deep,” Takuma Ikemoto of Tokai Tokyo Intelligence Laboratory told Reuters on Monday. He cautioned that gains could struggle after the first wave of buying.

Nikkei 225 stock market rally

Reclaiming 60,000 is an important psychological milestone, but the Nikkei remains below its June peak.

Recoveries after severe falls can reflect short-covering and bargain hunting rather than a lasting change in fundamentals.

Takashi Hiroki, chief strategist at Monex Securities, wrote on Monday that institutional portfolio adjustments often prolong market recoveries. Selling can return as prices rise because investors use rebounds to reduce exposure.

His weekly forecast range of 55,000 to 60,000 has already been exceeded intraday, highlighting how quickly sentiment has shifted.

The next tests include Tuesday's US consumer inflation figures, Friday's producer prices and SoftBank's scheduled results.

Strong inflation could revive expectations of higher Federal Reserve rates, while disappointing earnings could renew questions about AI investment.

AI disclosure: AI tools assisted with research and drafting of this piece. An Invezz editor reviewed the facts, sources and wording before publication. Any opinions or analysis are Invezz’s, not those of an automated system.