Japan’s Stock Market Hits Record High
Japan’s Nikkei 225 stock index hit a record high on Aug. 12 as Asian markets cheered news that the U.S. and China have delayed tariffs on one another until November of this year.
Japan’s benchmark index hit an all-time high, closing up 2.15% at 42,718.17. The previous record close was reached in July 2024 when the Nikkei 225 hit 42,426.77.
Japan’s stock market is now up 18% in the last 12 months, nearly matching the 19% gain in the S&P 500 over the same period.
Japanese equities have been rising on growing trade optimism and hopes for interest rate cuts in the U.S.
However, the latest rally in Japan has been a bit of a surprise as it comes after months of trade uncertainty and with economic data pointing to a potential recession in the Asian nation.
Stocks began to rally after Japan and the U.S. struck a partial trade deal on July 22, with the U.S. agreeing to lower its import duties on Japanese goods.
Shares in Toyota Motor Co. (TM), Japan’s largest publicly traded company, rose 2.95% on Aug. 12. The yen currency has also held steady at about ¥148.2 to the U.S. dollar.
Analysts say optimism has returned to Japanese markets after the U.S. softened its stance on tariffs and brought the duties levied on Japan in line with the European Union (EU).
Japan is now looking at an effective U.S. tariff rate of 15%. The Nikkei 225 is also getting a boost from the latest U.S.-China tariff extension, say analysts.
Washington and Beijing have agreed to extend the suspension of higher tariffs on each other until November of this year in order to allow for further trade negotiations.
Japan's Topix, an index with more constituents than the Nikkei 225, also hit a new record high on news of the latest U.S.-China tariff delay.
The Nikkei 225 reached an all-time high of 38,957.44 on Dec. 29, 1989, and traded below that level for the next 30 years.
At one point, the Nikkei 225 was down more than 80% from its record high set in 1989. The index finally reached a new high on Feb. 22, 2024, ending decades of malaise.
