Nikkei Breaks Downtrend, Market Tests Direction of US-Iran "Talks"
Japanese stocks rallied on Tuesday after US President Donald Trump signaled he would end plans to attack Iran's energy infrastructure. The move raised concerns about an escalating conflict and boosted risk appetite in the stock market.
In early trading, the Nikkei 225 rose as much as 2.3%, while the Topix rallied as much as 2.5%. The gains were led by electronics and banking stocks, which were the largest contributors to the Topix's gains.
This rally broke a two-day downtrend in Japanese indices, which had previously been fueled by concerns that the Middle East conflict would weigh on Asian economies and corporate profits. Following Trump's comments on Monday, oil prices reportedly fell by around 10%, with Brent trading at around US$100 per barrel when the Tokyo market opened.
Nomura Asset Management believes more constructive news on the war front could potentially provide room for a recovery in Japanese equities. The rise in US technology stocks on Monday is also said to have supported global sentiment and helped encourage buying in the Japanese market.
However, the risks are not completely gone. Oil prices remain at high levels, and it remains unclear whether the US-Iran talks Trump has mentioned will lead to a ceasefire. This uncertainty limits the opportunity for further gains after the initial buying momentum subsides.
Trump said the US was holding "productive talks" with Iran and would hold off on attacks on energy assets for five days, but Iran denied any direct negotiations. In individual stocks, Tokio Marine Holdings rallied after Berkshire Hathaway announced it would invest approximately US$1.8 billion in the insurance company.
Source: Newsmaker.id
