Nikkei Surges Above 44,000 Mark on Trade Optimism and Stimulus News

In a notable milestone, Japan’s Nikkei share average surpassed the key 44,000 mark for the first time on Tuesday. The positive trajectory was fueled by optimism surrounding trade developments and hints of potential increases in stimulus spending. The Nikkei 225 Index made a strong showing, surging as much as 1.24% to an all-time high of 44,185.73 in early trading. However, gains were later moderated as the index entered the midday trading break, up by 0.2% at 43,732.80. The broader Topix index also saw gains, up by 0.06% at the break following a previous climb of 0.77%.

The market responded positively to news that U.S. tariffs on Japanese autos are scheduled to be lowered by September 16, as confirmed by Japan’s chief tariff negotiator Ryosei Akazawa. This clarification helped dispel uncertainties stemming from a trade deal struck in July. Additionally, investor sentiment was buoyed by the announcement of Prime Minister Shigeru Ishiba’s resignation, with the expectations of a more accommodative stance on fiscal and monetary policies under a new leadership.

Semiconductor-related shares particularly stood out, mirroring the success of U.S. counterparts, with chipmakers like Broadcom driving the trend. Advantest, a chip-testing equipment maker and Nvidia supplier, emerged as the Nikkei’s top gainer, rallying over 7%. Other notable performers included Screen Holdings and Tokyo Electron, both manufacturers of chip-making tools, which recorded gains of 3.74% and nearly 2%, respectively. Technology giant Sony also saw a positive uptick of around 2%.

Commenting on the current political landscape, BofA Securities analysts noted the importance of the ruling coalition securing a strong majority in the Lower House to avoid operating as a minority government. Expectations are high for a more expansionary fiscal approach in the upcoming debates, with the prospect of collaboration with opposition parties in the mix.

Overall, the Nikkei’s surge past the 44,000 mark reflects a confluence of positive factors driving investor optimism, including trade advancements, potential stimulus measures, and a shifting political landscape. The market’s response to these developments sets the stage for continued momentum in the days ahead.