Japan's Nikkei Rallies as Focus Shifts to Tech Earnings

Japan's Nikkei share average climbed in early trading Tuesday, as markets reopened after a holiday and investors sought bargains following the index's steepest weekly selloff in over a year. The benchmark Nikkei 225 gained 1.25 percent to 64,945.96, attempting to recover from a 6.4 percent plunge last week. The broader Topix index also rose 1.33 percent to 3,971.20.

While Japanese markets were closed Monday, Wall Street indexes saw a slight decline due to escalating U.S.-Iran tensions impacting oil prices. Investor focus is now shifting to the second-quarter earnings season, with key results expected this week from AI industry leaders such as Alphabet, Tesla, and Intel.

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Compared to the sharp fall we saw in the latter half of last week, this technical rebound does not yet appear to have very strong momentum.

Wataru Akiyama, an equities strategist at Nomura Securities, noted that the current technical rebound lacks strong momentum compared to last week's sharp fall. He believes upcoming earnings announcements in both Japan and the U.S., especially from major companies, will be crucial in addressing the current weakness observed in AI-related stocks.

The market breadth was overwhelmingly positive, with 196 out of 225 stocks on the Nikkei trading higher. Notable gainers included chipmaker Kioxia Holdings, up 5.89 percent, and cosmetics giant Shiseido, up 5.78 percent. Conversely, video game maker Nintendo was among the largest decliners, down 3.91 percent.

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Upcoming earnings announcements in Japan and the U.S., particularly those from major names, are likely to resolve some of this weakness in AI-related shares.