The Nikkei 225 Index continued its recent recovery, driven by companies in the artificial intelligence (AI) industry. It jumped and crossed the important 70,000 milestone, hitting the highest level since July 6 this year. It has soared by nearly 12% from its lowest level in September.
AI stocks boost Japanese stocks
The Nikkei 225 Index, which tracks the biggest companies in Japan, rose on Monday as investors rotated to firms in the AI space. SoftBank Group, which has a large stake in OpenAI and other AI companies, jumped by nearly 4%, reaching a high of 6,558 yen. It has jumped by 47% from its lowest level in July. It recently cleared $10 billion bridge facility to fund its OpenAI investment.
Tokyo Electron stock jumped by 5.62%, while Advantest and Murata Manufacturing rose by 4.81% and 3.4%, respectively. These stocks are mirroring the performance of other firms in the AI industry like Nvidia and AMD. Nvidia jumped to a record high last week as it sought to cross the $6 trillion valuation milestone. AMD has already crossed the $1 trillion mark.
The surge is linked to the large share buyback program that Nvidia announced last week, which may be replicated by other firms in the industry. It will repurchase shares worth $150 billion on top of the $80 billion in the current authorization.
AI stocks are also soaring after Micron demonstrated that there is more room to grow. The company’s revenue jumped to over $54 billion last quarter, higher than the expected $51 billion. Its gross margins continued growing, reaching a high of 86%.
Falling crude oil prices
The Nikkei 225 Index is also rising because of the ongoing weakness in the energy market. Brent and the West Texas Intermediate (WTI) dropped to $101 and $89, respectively.
Oil prices dropped as investors reacted to the recent decision by G7 countries to release 100 million barrels of oil from the Strategic Petroleum Reserves. The Trump administration pushed them to do that as diesel prices surged to the highest level on record. It is also concerned that these prices will lead Republicans to lose the election.
Oil is falling even as the situation in the Middle East worsens. Saudi Arabia and Yemen are fighting the Houthis, which has responded by targeting key oil plants in Saudi Arabia. It hit some key refineries owned by Saudi Aramco. Iran is also expected to launch more attacks against US targets ahead of the election.
Nikkei 225 Index technical analysis
NI225 Index chart | Source: TradingView
The daily chart shows that the Nikkei 225 Index has encouraging technicals. It has already jumped above the crucial resistance level of 69,640, its highest level on August 14.
Additionally, the index has moved above the upper side of the symmetrical triangle pattern. It also jumped above the 50-day and 100-day moving averages, while top oscillators like the RSI and MACD have continued rising.
These technicals suggest that it has the momentum that may push it to its highest point this year. This target is about 4% above the current level.
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