Japanese Stocks Recover, But Oil Risks Remain
Japanese stocks rallied on Tuesday after US President Donald Trump postponed a planned attack on Iran's energy infrastructure, temporarily easing fears of escalation and boosting risk appetite. The Topix closed up 2.1% at 3,559.67, while the Nikkei 225 gained 1.4% to 52,252.28, snapping a two-day downtrend fueled by concerns that a surge in oil prices would weigh on Asian economies and corporate profits.
Although oil prices fell about 10% following Trump's comments on Monday, prices rebounded on Tuesday, with Brent hovering around US$103 per barrel in Tokyo mid-afternoon. Market participants attributed the rally to the assumption of behind-the-scenes negotiations, although Iran has denied direct negotiations. Meanwhile, reports suggesting Saudi Arabia and the United Arab Emirates are taking steps toward further engagement have kept volatility high, as the Japanese market is highly sensitive to oil prices.
The gains were led by the insurance, banking, and trading house sectors. The Topix insurance stock index jumped 7.9%, its biggest gain since April, after Tokio Marine Holdings announced that Berkshire Hathaway would invest approximately US$1.8 billion in a strategic partnership. Tokio Marine shares surged 17%, hitting their daily gain limit, as the market viewed Berkshire's investment as potentially boosting interest in other Japanese stocks, as it had previously done with trading houses.
Source: Newsmaker.id
