Japan's Nikkei 225 Index rallied strongly on Tuesday, reaching a six-week high fueled by growing optimism surrounding diplomatic efforts to resolve the conflict in Iran. The benchmark index jumped 2.43% to 57,877.39, marking its highest close since March 2. Meanwhile, the broader Topix index climbed 0.87% to 3,755.27.
Japan’s Indices Rally on Geopolitical Easing
Market sentiment was bolstered by positive remarks suggesting a reduction in geopolitical risk. Although ceasefire talks stalled over the weekend, U.S. Vice President JD Vance stated that progress was being made in negotiations. He further indicated that Washington expects Iran to proceed with reopening the vital Strait of Hormuz shipping lane.The immediate market reaction was visible in crude oil prices. U.S. crude fell 1.57% to $97.52 a barrel, while Brent oil traded at $98.83 per barrel, marking a 0.54% dip for the day. The move suggests that fresh trade flow through key global waterways is anticipated.
Tech Sector Leads Gains as Investors Eye AI Potential
Sectoral performance was highly uneven, with 137 advancing stocks outnumbering 87 decliners. Semiconductor-related companies and firms specialized in artificial intelligence emerged as the sharpest gainers.The tech giants dominated the rally. AI investor SoftBank Group spearheaded the gains, surging by 12.7%. Following close behind were chipmaker Kioxia, which rose 11.9%, and tech-sector supplier Advantest, which gained 8.5%.
Corporate Earnings and Future Outlook Keep Focus
While the rally provided immediate momentum, analysts are pointing toward corporate performance as the next major market driver. Maki Sawada, an equities strategist at Nomura Securities, noted that while there remains a risk of the situation deteriorating, focus will soon shift to corporate earnings.According to Nomura, the momentum in corporate earnings is expected to increase. Determining whether the Nikkei will return to the levels seen before the conflict began will ultimately depend on corporate results, which are scheduled to start in late April.
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