Japanese equities rallied Monday as renewed hopes for a US-Iran agreement to reopen the Strait of Hormuz lifted electronics shares and eased supply-chain concerns.
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Nikkei jumps 2.3% as US-Iran deal hopes lift electronics stocks
Japanese equities rallied Monday as renewed hopes for a US-Iran agreement to reopen the Strait of Hormuz lifted electronics shares and eased supply-chain concerns.
The Nikkei 225 rose 2.3 percent to 65,456.79, led by electronics stocks, on renewed hopes for a US-Iran deal to reopen the Strait of Hormuz.
"The bigger focus is whether this week turns into a rinse and repeat of last week — with hopes of a deal collapsing as Iran digs in its heels," said Tony Sycamore, a market analyst at the investment platform IG.
Treasury Secretary Scott Bessent said Tuesday the US could reach a deal with Iran to reopen the strait "today or tomorrow." The dollar traded at 157.66 yen, compared with 157.69 at Tuesday's Tokyo close. Brent crude fell as much as 7.3 percent to $81.55 a barrel before settling near $83.47, while West Texas Intermediate dropped more than 5 percent to $79.47. The slide in oil prices pushed the US 10-year Treasury yield down five basis points to 4.68 percent.
The rally extends a volatile stretch for Japanese equities, which have swung between record highs above 72,000 and sharp selloffs as investors weigh the AI trade against Gulf conflict risk. Corporate earnings from chipmakers including Advantest and Kioxia are due this week, with investors watching for guidance on how the conflict affects supply chains and input costs.
Oil Plunges as Diplomacy Hopes Resurface
Trump said late Saturday on Truth Social that Iran and other Middle Eastern countries had asked for time to complete a deal that would lead to the "Immediate, Complete and Total" reopening of the strait. On Sunday, he said talks would start Monday, a claim denied by Tehran. Iran's foreign minister said the country was not currently negotiating with the US, although talks with Oman about a temporary route through the strait were in their final stages.
OPEC+ agreed Sunday to increase production by about 188,000 barrels a day from September, unwinding output cuts. However, because of export disruptions from the Gulf caused by the Iran and Ukraine wars, the production increases have had little impact on prices.
Yen Intervention Shakes Currency Markets
The yen hit a three-month high after Tokyo and Washington launched a joint operation to support the currency — the first coordinated US-Japan intervention in 15 years, confirmed by Finance Minister Katayama. Treasury Secretary Bessent said the US would not hesitate to step into the market again. Japan's currency chief Mimura said Japan would respond to FX moves in coordination with monetary policy, hinting the Bank of Japan might be more inclined to raise rates.
The intervention flushed out speculators holding short-yen positions, driving USD/JPY sharply lower to a low of 155.23 after the Japanese market open. The yen subsequently weakened, with USD/JPY trading near 157.
European shares rose, with the Stoxx 600 up 0.5 percent, while energy stocks slid 2 percent and travel and leisure gained 2.1 percent. US stock futures pointed to a higher open on Wall Street, with the S&P 500 up 1.5 percent and the Nasdaq up 2.2 percent in late-afternoon trading. The ISM manufacturing index rose to 55.6, its highest level in more than four years, pointing to strong growth momentum in the sector.
This article is for informational purposes only and does not constitute investment advice.
