Japanese stocks rebounded on Wednesday, with the Nikkei 225 Index climbing 1% to around 39,400 and the broader Topix Index rising 0.4% to 2,768, recovering from losses in the previous session when technology stocks faced a selloff.

The decline on Tuesday was driven by concerns over the emergence of Chinese startup DeepSeek, which posed a challenge to the dominance of Western artificial intelligence leaders.

Meanwhile, minutes from the Bank of Japan's December meeting revealed that the central bank maintained a cautious stance on monetary policy, emphasizing that any adjustments would depend on inflation trends, wage growth, and global economic risks.

Chip-related and AI stocks led the rally, with notable gains from Advantest (up 5.4%), SoftBank Group (up 1%), Tokyo Electron (up 1%), Hitachi (up 2%), and Keyence (up 1%). Other major index heavyweights also saw strong performances, including IHI Corp (up 2.5%), Mitsubishi Heavy Industries (up 2.6%), and Sony Group (up 3.6%).

Source: Trading Economics