TOKYO: Japan’s Nikkei share average rebounded on Tuesday from the previous day’s steep drop, taking cues from Wall Street as investors turned more optimistic that the Gaza conflict would not have a large impact on markets.

The Nikkei gained 0.9% to 31,944.31 as of the midday break, following Monday’s more-than-2% tumble. Of the benchmark’s 225 components, 142 rose versus 79 that fell, while four were flat.

The broader Topix rose 0.5%.

The Topix growth share subindex outpaced the value share subindex with gains of 0.9% and 0.2% respectively.

Tech stocks, which had been sold off aggressively at the start of the week, rebounded strongly.

Precision machinery and information and communication subindexes were the second- and third-best performers among the Tokyo Stock Exchange’s 33 industry groups, rising 1.6% and 1% respectively.

The services index was the top performer, jumping 1.9%.

Japan’s Nikkei jumps, led by rally in chip shares

A decline in crude prices buoyed sentiment, as Japan is a major energy importer.

Oil traders said the Israel-Hamas conflict did not appear to threaten supplies in the short term. However, Kyle Rodda, an analyst at Capital.com, warned against complacency.

“The price action doesn’t signal the risks posed by an outright ground war in the Gaza Strip have passed - things look more like a repositioning after the relatively violent moves at the end of last week,” Rodda wrote in a note.

“While hopes remain that tensions may cool, perhaps in response to global diplomatic pressure… the balance of probabilities is tipping towards a full-on invasion.”

US President Joe Biden will visit Israel on Wednesday for talks with Israeli Prime Minister Benjamin Netanyahu, after the countries agreed to develop a plan to enable humanitarian aid from donor nations and multilateral organisations to reach civilians in Gaza.

Japanese chip stocks rebounded and were standout winners, with Tokyo Electron gaining 2.1% and Advantest up 2.1%.

Startup investor SoftBank Group added 2.3%.