Japan’s Nikkei share gauge rebounded on Wednesday after experiencing its steepest drop since April. Investors flocked back to technology stocks, which had been impacted by concerns over ongoing trade friction between China and the United States.

The Nikkei 225 Index rallied by 1.8%, finishing the day at 47,672.67, thus recovering part of the previous session’s 2.6% decline. This rebound coincided with the return of Japanese markets after a holiday.

The broader Topix index saw a gain of 1.6% as investor confidence began to stabilize.

SoftBank Group, a significant player in the chip and artificial intelligence sectors, experienced a 5.1% increase, bouncing back from a 6% decline on Tuesday. Meanwhile, Advantest, a manufacturer of chip-testing equipment, climbed 2.2% following a two-day downturn.

Investor sentiment had been under pressure due to escalating tensions between the United States and China, alongside political maneuvering regarding Japan’s future leadership.

Fumika Shimizu, a strategist at Nomura Securities, commented, “We’re seeing a corrective rebound in semiconductor-related stocks that fell sharply yesterday.” She added that the ongoing uncertainty about Japan’s political landscape has persisted since last Friday.

“Achieving clarity on that front would likely be the driver needed for a genuine return to an upward trend,” Shimizu emphasized.

Last week, China announced significant expansions to its rare earth export controls, while U.S. President Donald Trump threatened to increase tariffs on Chinese goods significantly.

In Japan, Sanae Takaichi, head of the ruling Liberal Democratic Party (LDP), was reported to be arranging meetings with three major opposition parties. Her aspirations to become prime minister faced challenges following the exit of the LDP’s junior coalition partner on Friday.

In other notable stock movements, online retailer Mercari surged 14% after announcing its withdrawal from the on-demand employment service sector. Meanwhile, mall operator Aeon soared 9.4% after reporting record sales and operating profits for the first half of the year.

Sapporo Holdings also made headlines, advancing 1.8% upon news from the Nikkei newspaper that the beer maker is nearing a deal to sell its real estate business.

In summary, while the Japanese stock market faced challenges due to external pressures and political uncertainties, the recent rebound in tech stocks has provided some hopeful signs for investors.