Nikkei crosses 42,000 as Wall Street rally spurs sentiment

Japan's Nikkei surged to another record high during morning trade on Thursday, as a rally in US stocks overnight boosted investor sentiment.

The Nikkei was up 0.83 per cent to 42,179.84 by the midday break, after jumping over 1 per cent to an all-time intraday high of 42,426.77 points. It was the first time the benchmark index has crossed the 42,000-point mark.

The broader Topix was up 0.66 per cent at 2,928.30.

Strong performances in all three of Wall Street's main stock indexes on Wednesday kicked off the rally. The Nasdaq and S&P 500 closed at record high closes as US chip maker Nvidia and other heavyweights gained ahead of inflation data and quarterly earnings reports.

Japan's semiconductor-related shares marched higher with their US peers, which got a boost from strong quarterly revenue results from contract manufacturer Taiwan Semiconductor Manufacturing.

Gains were widespread, with 178 of the Nikkei's 225 constituents advancing, including index heavyweights Uniqlo parent firm Fast Retailing, up 1.5 per cent.

Japanese equities have climbed to all-time highs over the past two weeks, with analysts citing further yen depreciation and more clarity on the outcome of this year's US presidential election as reasons.

Analysts expect Japanese shares to see further momentum as companies report earnings this month.

"This earnings season, Japanese corporate earnings are likely to be better than expected because of the degree of yen depreciation," Kenji Abe, chief strategist at Daiwa Securities said.

"There may be some further increases in equity prices as we see good earnings reports from companies," potentially pushing the Nikkei as high as 42,600 or 42,700 points, he said.

Among chip-related shares, chip-making equipment giant Tokyo Electron rose 1.2 per cent and Disco Corp climbed about 3 per cent.

Socionext jumped 4.7 per cent to become one of the best performers by percentage, just behind Sumco, up 5.1 per cent.

Sony Group came in third, with the tech and entertainment conglomerate gaining 3.7 per cent.

(With Reuters inputs)