Nikkei Hits Record High as SoftBank Leads Tech Surge
Japan’s Nikkei share index surged to an all-time high on Tuesday, fueled by strong gains in technology stocks and renewed optimism over U.S.-Japan trade relations.
With Tokyo markets reopening after a Monday holiday, the benchmark caught up with record levels recently reached by other major global markets.
The Nikkei 225 closed 2.2% higher at 42,718.17, its highest close ever. Earlier in the session, it touched 42,999.71, surpassing the previous intraday record of 42,426.77 set on July 11, 2024.
Breaking Records in 2024
This year has been a milestone for the Nikkei. It broke a record that had stood since Japan’s 1989 bubble economy. The broader Topix index has been setting new highs since July 24, rising 1.4% on Tuesday to a record 3,066.37.
Global markets, including the S&P 500 and MSCI World Index, have also been hitting fresh peaks since June.
Tech and SoftBank Drive Gains
“The Nikkei was unable to hit a record until today because chip and auto stocks had been a drag,” said Takamasa Ikeda, senior portfolio manager at GCI Asset Management. “It may peak soon as U.S. tech momentum slows.”
SoftBank Group (TYO:9984) soared 6.9% to a historic 14,825 yen, jumping over 25% in just five days. The rally was boosted by news that SoftBank is selecting banks for a potential U.S. listing of its PayPay payment app.
Chipmakers Advantest and Lasertec rose 6.3% and 7.1%, respectively.
Trade and Tariff Developments
Global stocks initially fell after U.S. President Donald Trump’s April 2 “Liberation Day” tariff announcement. However, markets have rebounded as trade tensions eased and investor excitement over artificial intelligence (AI) stocks grew.
U.S. tariffs had weighed on Japanese shares due to the country’s export-driven economy. But Washington has pledged to amend a presidential order to remove overlapping tariffs on Japanese goods.
“The impact of U.S. tariffs seems less severe than the market feared,” said Shoichi Arisawa, general manager at IwaiCosmo Securities. “More companies are likely to upgrade their outlooks, and a weaker yen is also helping exporters.”
Foreign Investor Flows Show Signs of Cooling
Overseas investment in Japanese stocks has been strong in recent months, but recent data suggests momentum may be slowing.
For the week ending August 1, foreign investors became net sellers for the first time in 16 weeks, offloading 342 billion yen ($2.3 billion) in shares and futures. This was a sharp reversal from the prior week’s 1.26 trillion yen in net purchases.
