Japan’s Nikkei 225 stock index soared to an unprecedented peak on Tuesday, climbing 2.4% to 42,868 and decisively smashing its July 2024 high of 42,426. This historic surge marks the latest triumph in the benchmark’s remarkable 18% annual rally as investor sentiment pivots sharply toward Japanese assets.
Trade Truce and Tech Surge Fuel Rally
The rally ignited after Washington and Beijing extended their tariff ceasefire by 90 days, easing global growth anxieties and unexpectedly softening projected impacts on Japanese exporters. Simultaneously, robust U.S. corporate results and rising bets on Federal Reserve rate cuts turbocharged risk appetite.
Technology shares led the advance as AI-fueled demand brightened sector prospects. SoftBank Group rocketed 6.9% following stellar earnings, adding to a prior double-digit jump. “Clarity on trade policy reduces earnings downgrade risks,” noted a leading securities firm official, reflecting widespread relief.
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Broad Participation Signals Confidence
Market breadth remained decisively positive with numerous corporations upgrading profit guidance. Early trading saw the index hit 42,867.69—surging over 1,000 points—as economic resilience and diminished tariff threats lifted exporters. Key drivers included:
- U.S.-Sino détente easing supply-chain disruptions
- AI investments boosting tech valuations
- Corporate earnings upgrades outpacing forecasts
Sustaining the Momentum
While the Nikkei’s record-setting performance reflects robust optimism, its durability hinges on whether companies convert favorable conditions into sustained profit growth. Market observers note that trade-exposed sectors remain sensitive to future policy shifts, though current indicators suggest Japan’s equity upswing maintains solid foundations.
