Japan's Nikkei share average shot to a record high on Thursday and the nation's bonds rallied as financial markets reopened after holidays, catching up with optimism over strong technology earnings and signs of a potential peace deal in the Middle East.
The benchmark Nikkei 225 Index jumped 5.58%, the most in more than a year, to close at an unprecedented 62,833.84. The gauge reached as high as 63,091.14, breaking through the psychological level of 63,000 for the first time. The broader Topix climbed 3% to 3,840.49.
Japanese government bonds (JGBs) rose after a three-day trading break that saw the yen appreciate on suspected intervention by authorities in Tokyo.
The yen bought 156.375 per dollar, largely steady a day after a sprint to a 10-week high of 155 fuelled talk of further official support.
Wall Street indexes hit record highs overnight as positive results from Advanced Micro Devices propelled euphoria over the red-hot artificial intelligence sector. Iran said it is reviewing a U.S. proposal to end the more than two-month war, while President Donald Trump said the U.S. has had very good talks with Tehran.
“Today’s sharp gain of the Nikkei was led by the strong performance of chip shares, driven by Advanced Micro Devices’s strong forecast," — said Takamasa Ikeda, a senior portfolio manager at GCI Asset Management. “The contents of the U.S.-Iran peace proposals are thin, but there is an expectation in the market that further military action will not take place.”
There were 174 advancers on the Nikkei index against 49 decliners. The largest percentage gainers in the index were tech sector suppliers, led by Ibiden, up 22.4%, followed by Sumco, which surged 19.7%, and Kioxia, 19.2% higher.
Mining and exporter shares were broadly lower, however, marking a reversal from gains during the Iran conflict as energy prices surged and the yen weakened. Inpex, Japan’s top oil and gas explorer, sank 6.5%, leading decliners, while Honda Motor lost 0.24%.
“The automakers remain weak as the environment has become severe with intensifying global competition," — said Hiroyuki Ueno, chief strategist at Sumitomo Mitsui Trust Asset Management. "Besides that, they may not enjoy benefits of the weak yen in the current fiscal year."
Minutes released on Thursday of the Bank of Japan's March meeting showed many board members saw the need to raise interest rates if the Iran war-driven energy shock is prolonged.
JGBs got a boost as the stronger yen and stabilising oil prices over Japan's holidays eased concerns about inflation, which diminishes the fixed returns on debt.
The benchmark 10-year JGB yield fell 2.5 basis points (bps) to 2.475%. The two-year yield, the one most sensitive to central bank policy rates, decreased 1.5 bps to 1.365%.
