Japan’s Nikkei Hits Record High Amid Tech Surge and U.S. Trade Optimism

Japan’s Nikkei share index surged to an all-time high on Tuesday, driven by strong gains in technology stocks and renewed optimism over trade relations with the United States.

With financial markets reopening after Monday’s public holiday, the Nikkei 225 caught up with record peaks reached earlier this year by other major global indices. The benchmark jumped 2.2% to close at 42,718.17 — its highest finish on record — after touching an intraday peak of 42,999.71, surpassing the previous high of 42,426.77 set on July 11, 2024.

The rally marks a dramatic turnaround for Japan’s equity market in 2024, a year in which the Nikkei first broke a record set during the country’s 1989 bubble economy. The broader Topix index also set a fresh record, rising 1.4% to 3,066.37, extending a streak of all-time highs since July 24.

The gains follow similar trends in global markets, with the S&P 500 and MSCI’s broad gauge of world equities posting new peaks since June.

“The Nikkei was not able to hit a record until today because chip-related and auto stocks had been weighing on the index,” said Takamasa Ikeda, senior portfolio manager at GCI Asset Management. “The Nikkei could soon peak as technology shares that led Wall Street’s rally have slowed down.”

Tech Stocks Lead the Charge
SoftBank Group soared 6.9% to 14,825 yen, its highest level ever, extending a rally of more than 25% over the past five sessions. The stock was further buoyed by reports that SoftBank is selecting banks for a potential U.S. listing of its PayPay payments unit.

Semiconductor heavyweights Advantest and Lasertec surged 6.3% and 7.1%, respectively, adding to the tech-driven momentum.

Tariff Concerns Ease
Global markets had slumped after U.S. President Donald Trump’s April 2 “Liberation Day” announcement of sweeping tariffs on imports from dozens of countries. However, those losses have been more than erased amid subsiding trade concerns and surging investor enthusiasm for artificial intelligence-related stocks.

U.S. officials said Thursday they would amend a presidential executive order to remove overlapping tariffs on Japanese goods — a move that lifted sentiment in Tokyo, where exports remain a key economic driver.

“The impact of U.S. tariffs seems not as serious as the market had expected,” said Shoichi Arisawa, general manager of investment research at IwaiCosmo Securities. “There will be more companies revising up their outlooks due to the limited impact, and the yen’s weakness is also a positive factor for Japanese exporters.”

Foreign Investment Momentum Slows
While foreign capital has been flowing steadily into Japan’s stock market in recent months, Tokyo Stock Exchange data suggest the trend may be cooling. For the first time in 16 weeks, overseas investors were net sellers of Japanese stocks and futures in the week ending August 1, offloading a net 342 billion yen ($2.3 billion), compared to net purchases of 1.26 trillion yen the previous week.