Japan’s Nikkei Rallies 6%, Hopes for Recovery Lift Investor Sentiment

Image Credit: Reuters

Japan's Nikkei share average surged 6% on Tuesday, recovering from a 1.5-year low reached in the previous session, as investors bought up stocks, encouraged by signs of a rebound on Wall Street.

By 0202 GMT, the Nikkei index had risen 6.5% to 33,161.72, while the broader Topix index climbed 6.8% to 2,444.44. "Investors bought back stocks, believing they were oversold, and saw signs of a market recovery as U.S. stock futures rose during Japan's trading hours," said Takamasa Ikeda, senior portfolio manager at GCI Asset Management.

Although the S&P 500 and Dow closed lower, the Nasdaq gained marginally on Monday after a volatile session. U.S. semiconductor stocks rose 2.7%, and both S&P and Nasdaq futures climbed more than 1% in Asia trade on Tuesday, signaling signs of recovery.

Both the Nikkei and Topix are down about 13% from pre-tariff levels before U.S. President Donald Trump’s "Liberation Day" tariff announcement, raising concerns about the impact on Japan's export-reliant economy.

Japanese Prime Minister Shigeru Ishiba expressed disappointment with the tariff policies during a phone call with Trump on Monday and urged him to reconsider.

Tuesday’s gains were further supported by optimism that tariff negotiations between Japan and the U.S. might ease the pressure on Japan, according to Ikeda. Among individual stocks, chip equipment maker Tokyo Electron jumped 8.6%, while chip-testing firm Advantest soared 11.6%.

Fujikura, a key player in data center investments, surged 19%, becoming the top gainer in the Nikkei. Bank stocks also saw strong gains, with Mitsubishi UFJ Financial Group up 12.3% and Mizuho Financial Group rising 14%.

All 33 industry sub-indexes of the Tokyo Stock Exchange posted gains, with the insurance sector jumping 12.5% and banking stocks rising 11.6%.

Paraphrasing text from "Reuters" all rights reserved by the original author