Japan stocks jump 2% as investors welcome US-China trade truce
The benchmark Nikkei Stock Average at one point rose more than 800 points, or 2%, and touched its highest intraday level in over a month. The gains were led by banks, marine shipping and exporters, including automakers. The broader Tokyo Stock Price Index also jumped close to 2%, while futures on the Osaka exchange were up more than 2%.
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Japan Today
2 days ago
- Japan Today
Nikkei likely to stay above 40,000 despite political uncertainty
A financial data monitor in Tokyo shows the Nikkei Stock Average climbing above 42,000 on July 24, 2025. (Kyodo) ==Kyodo By Risako Nakanishi Boosted by a Japan-U.S. trade deal, the Nikkei stock index is expected to stay afloat above the 40,000 threshold at least for a while, despite political uncertainty created by the major setback suffered by Japan's ruling parties in a recent national election. The benchmark may soon break its record high by surpassing 42,224.02 registered a year ago, but the market could face a downside risk if long-term interest rates surge further due to expectations of expansionary fiscal measures like a consumption tax cut. "With uncertainty over tariff negotiations dispelled, it makes it easier for companies to foresee future earnings, helping to support the stock market," said Maki Sawada, a strategist at the Investment Content Department of Nomura Securities Co. The Nikkei added more than 2,000 points over the two days through Thursday after the agreement that U.S. tariffs on imported Japanese cars and other goods will be lowered sharply to 15 percent, although the yield on the key 10-year government bond spiked to 1.600 percent, its highest level since 2008. "As long as higher interest rates are accompanied by improving business performance, stocks will rise as seen in the past," Sawada said, expecting the index to be supported around the 40,000 line. The market is likely to be buoyed by hopes for upward revisions in earnings after some major companies like Toyota Motor Co. projected a hefty 35 percent drop in net profit for this fiscal year by factoring in an additional 25 percent tariff imposed by Washington from April. Trade data show that Japan's shipments to the United States, the largest export destination for Japanese automakers, dropped 11.4 percent in value terms in June from a year earlier for the third consecutive monthly decline, contributing to a 30.8 percent plunge in its trade surplus with the country. "Stocks may be further lifted by positive incentives like more U.S. trade deals with the European Union and China, as well as economic data and earnings," possibly sending the Nikkei to the 44,000 level at one point, said Masahiro Yamaguchi, head of investment research at SMBC Trust Bank. While many analysts believe the current level of long-term interest rates at around 1.6 percent is unlikely to be an obstacle for stocks to chase higher ground, a spike toward 2 percent may stir concerns about increased borrowing costs and dent market sentiment. Situations surrounding the bond market suggest the likelihood of the yield climbing further, as the Japan-U.S. trade deal helped ease concern about the prospects of the domestic economy and will make it easier for the Bank of Japan to further raise interest rates. The tariff deal is a "big step forward," as it reduces economic uncertainty facing Japanese companies under U.S. President Donald Trump's trade policy, BOJ Deputy Governor Shinichi Uchida said Wednesday. His remark fueled speculation that the central bank will increase the policy rate again after raising it three times since March last year to around 0.50 percent, as it shifts from a decade of unorthodox monetary easing. "Given that the tariff negotiations ended up with a desirable agreement despite expectations of tough going, the recession risk in the second half of this year has alleviated considerably," said Daiju Aoki, chief Japan economist at UBS SuMi TRUST Wealth Management Co. "Japan's interest rates are likely to remain elevated with the probability of a rate hike by the end of year increasing significantly," Aoki said, adding that investors will adopt a cautious stance about buying bonds, whose prices move inversely to yields. Reflecting expectations for weakening demand, the auction for 40-year government bonds held Wednesday was sluggish, with the bid-to-cover ratio standing at 2.13 percent, its lowest level since 2011. Higher yields also followed on from the results of Sunday's House of Councillors election, which raised the possibility that expansionary fiscal measures may be adopted in the future, leading to further deterioration in Japan's fiscal health. The Liberal Democratic Party and its coalition partner Komeito suffered a major setback in the election, losing their majority in the upper house, with opposition forces urging that the consumption tax be cut, suspended, or even abolished to ease the pain of inflation. The ruling coalition, meanwhile, pledged to deliver cash handouts, which are likely to require fewer financial resources. "Currently the key long-term yield remains at around 1.6 percent, as there have not been specific moves leading to stimulus measures such as reducing the consumption tax," said Yutaka Miura, senior technical analyst at Mizuho Securities Co. "But if such moves come into sight, such as opposition parties starting to request such measures, the yield could climb further," he said, adding that it could affect negatively to the stock market if it rises to between 1.7 and 1.8 percent. © KYODO
The Mainichi
3 days ago
- The Mainichi
Tokyo stocks retreat after Japan-US trade deal jump
TOKYO (Kyodo) -- Tokyo stocks fell Friday as investors locked in gains after the Nikkei index surged more than 2,000 points over the past two sessions on a Japan-U.S. trade deal, while awaiting further earnings results. The 225-issue Nikkei Stock Average ended down 370.11 points, or 0.88 percent, from Thursday at 41,456.23. The broader Topix index finished 25.69 points, or 0.86 percent, lower at 2,951.86. On the top-tier Prime Market, decliners were led by chemical, iron and steel and transportation equipment issues. The U.S. dollar briefly strengthened to the mid-147 yen range in Tokyo after U.S. weekly jobless claims fell unexpectedly, helping to ease concern about the prospects for the world's largest economy, dealers said. Stocks declined throughout the day after the Nikkei benchmark briefly climbed to a one-year high above the 42,000 line Thursday, while shares of companies that released weak earnings and projections plunged. Among such issues, Mitsubishi Motors ended down 7.9 percent at 406.0 yen, after the automaker said its net profit in the April-June quarter dived 97.5 percent from a year earlier, pressured by the adverse impact of hefty U.S. tariffs. More companies are set to announce their earnings next week, including Nissan Motor and Nippon Steel. "After Japan reached the trade deal with the United States, some companies are expected to make comments about the impact of the latest agreement," said Masahiro Ichikawa, chief market strategist at Sumitomo Mitsui DS Asset Management Co. "Full-year earnings would be examined based on such comments, and share prices of companies are likely to be influenced by how they are affected by the tariffs," he added.
The Mainichi
4 days ago
- The Mainichi
Nikkei ends at 1-year high as fears of tariff impact on economy ease
TOKYO (Kyodo) -- The Nikkei stock index closed at a new one-year high Thursday, with the Topix index ending at a record high, as concerns eased over the impact of U.S. tariffs on the Japanese economy after Tokyo and Washington struck a trade deal. The 225-issue Nikkei Stock Average gained up 655.02 points, or 1.59 percent, from Wednesday at 41,826.34. The broader Topix index finished 51.17 points, or 1.75 percent, higher at 2,977.55. All industry sectors advanced on the top-tier Prime Market, with gainers led by bank, precision instrument and nonferrous metal issues. The U.S. dollar briefly weakened to the upper 145 yen range in Tokyo, as expectations of an additional interest rate hike by the Bank of Japan grew and uncertainty over the Japanese economy receded following the trade deal. Japan and the United States agreed on 15 percent tariffs on products from Japan after President Donald Trump said earlier in the month the United States would impose 25 percent tariffs on imports from Japan starting Aug. 1 under "reciprocal" tariffs. Expectations for progress in tariff negotiations between the United States and other countries also grew after a report that the European Union is closing in on a trade deal with Washington, brokers said. "After the Japan-U.S. trade deal was abruptly announced at a time when (market participants) widely thought that it would not be reached by (the deadline of) August, hopes prevailed in the market that other countries will also follow suit," said Yuta Okamoto, market analyst at Tokai Tokyo Intelligence Laboratory Co. Bank shares also remained a market driver on hopes for improved profits amid a rise in Japanese long-term yields. After the benchmark Nikki index briefly rose above the 42,000 line, some investors moved to lock in profits from recent market gains. But, investors may chase the upside if they confirm solid earnings from major companies that are slated to release quarterly results soon, Okamoto added.
