Tokyo Stocks Rise as Investors Buy Back Semiconductor Shares Ahead of Nvidia Earnings

Tokyo stocks rose on August 26 as investors bought back selected semiconductor and financial shares. The Nikkei 225 closed at 66,262.16, up 405.73 points, or 0.62%, while the broader TOPIX rose 17.35 points, or 0.42%, to 4,111.02.

The market was thin ahead of Nvidia's earnings and uncertainty remained over artificial intelligence valuations. Investors were cautious about making a major directional bet before the next test of the global AI investment cycle. The yen remained around the 159-yen range against the dollar, stronger than its late-July lows near 164.

The strength in financials reflects the continuing shift away from Japan's long period of ultra-low rates. Higher rates can support bank lending margins and investment income, although the sector remains sensitive to sudden changes in bond yields and the valuation of banks' securities holdings.