Japan's Nikkei index surged to a record high on Monday, climbing as much as 1.4% to reach 67,231.28 before closing with a 0.9% gain at 66,934.33. The rally was largely driven by SoftBank, whose shares soared 14%, contributing 845 points to the index's 605-point net rise.
This surge in SoftBank's stock propelled its market capitalization to approximately 48.8 trillion yen ($306.0 billion), surpassing Toyota, which saw its market cap shrink to around 45.9 trillion yen after a 4.5% drop in its stock price.
Over the weekend, SoftBank announced a €75 billion ($87.3 billion) investment plan over five years to enhance AI infrastructure in France. However, the broader Topix index declined by 0.4%, highlighting a split between tech shares and the rest of the market.
“Despite concentration risks and rising volatility, the AI theme continues to be underpinned by strong earnings.”
Jefferies Strategists
Despite the overall market volatility, strategists at Jefferies noted that the AI theme is supported by strong earnings, emphasizing that the rally is fundamentally driven by earnings momentum.
Meanwhile, uncertainty in the Middle East continues to weigh on the market, with concerns about overvaluation persisting. Maki Sawada, a strategist at Nomura Securities, pointed out that the demand for AI servers is driving interest in AI-related stocks, such as Murata Manufacturing, whose shares jumped 9%.
“Uncertainty regarding the situation in the Middle East seems to be intensifying.”
Maki Sawada, Nomura Securities
Background
The Nikkei and Topix indices reached all-time highs on optimism over a potential peace deal in the Middle East, but ongoing geopolitical tensions and valuation concerns continue to impact market sentiment.
As the global market continues to grapple with geopolitical uncertainties and valuation concerns, investors will be closely watching developments in AI technology and its impact on stock performance.
