Japan’s key stock indexes end at record highs

The Nikkei benchmark renewed its record high for the first time in about a year after briefly gaining over 1,100 points, as heavyweight technology and semiconductor-related issues were sought on hopes for further growth in the artificial intelligence field.

The 225-issue Nikkei Stock Average surged 897.69 points, or 2.15 percent, from Friday at 42,718.17, surpassing the previous record set on July 11, 2024. The broader Topix index finished 42.16 points, or 1.39 percent, higher at 3,066.37, also closing at a record high.

Japanese financial markets were closed Monday for a national holiday.

On the top-tier Prime Market, gainers were led by mining, bank and information and communication issues.

The U.S. dollar held firm in the lower 148 yen range in Tokyo amid speculation that upcoming U.S. inflation data could show higher prices driven by increased tariffs, dampening expectations of an early interest rate cut by the Federal Reserve, dealers said.

At 5 p.m., the dollar fetched 148.26-27 yen compared with 148.08-18 yen in New York at 5 p.m. Monday.

The euro was quoted at $1.1620-1621 and 172.28-32 yen against $1.1611-1621 and 172.00-10 yen in New York late Monday afternoon.

The yield on the benchmark 10-year Japanese government bond was untraded for the first time since March 27, 2023, due to a lack of market participants during the summer holidays in Japan. Its yield ended at 1.485 percent on Friday.

Stocks rose sharply as uncertainty over U.S. tariffs receded after a White House official confirmed last week that imports from Japan will be exempt from tariff stacking, meaning Washington will not add a new 15 percent rate on top of preexisting duties.

The market's upward momentum was also supported by abating fears of a U.S.-China trade conflict on news that President Donald Trump signed an executive order extending a tariff truce with China for 90 days until Nov. 10.

"In addition to strong earnings from domestic demand-related firms, performances of export-oriented firms are not expected to be as bad as earlier feared, though some uncertainties remain," said Makoto Sengoku, senior equity market analyst at Tokai Tokyo Intelligence Laboratory Co.

The yen's depreciation also helped boost exporter shares as a weaker yen increases overseas profits of exporters when repatriated.

In April, the Nikkei index plunged below the 31,000 line amid growing concerns that a trade war between the United States and China may lead to a sharp slowdown in the global economy.

However, it quickly recovered as chip shares were bought back amid the AI boom and investors welcomed Japanese companies enhancing shareholder returns, brokers said.

Masahiro Yamaguchi, head of investment research at SMBC Trust Bank, said the Nikkei is "nearing the peak of overpricing," warning that it faces downside risks if U.S. tariff developments do not progress as expected or the U.S. economy worsens.

"But even if such risks materialize, the Nikkei's decline is likely to be limited, as hopes for U.S. interest rate cuts will support the Japanese market," he said.

Earlier, it was reported that Japan job availability has fallen in June for the second straight month.