Key Points:
- The Nikkei 225 stock average surged 1,879.73 points, or 3.14 percent, to end its five-day losing streak at 61,684.14.
- U.S. West Texas Intermediate crude oil prices dropped below $100 per barrel after comments from Donald Trump regarding a possible Iran nuclear deal.
- SoftBank Group shares rallied significantly following reports that OpenAI plans to file for an initial public offering.
- Yields on the benchmark 10-year Japanese government bond fell 0.025 percentage points to end at 2.760 percent.
Tokyo share prices rallied sharply on Thursday, with the benchmark Nikkei index jumping more than 3 percent. The dramatic recovery ended a painful five-day slide for local equities. A combination of falling global energy prices, progress in diplomatic talks, and exciting developments in the artificial intelligence sector triggered massive buying from both local and international investors.
The benchmark 225-issue Nikkei Stock Average climbed 1,879.73 points, or 3.14 percent, to finish the trading day at 61,684.14. The gain represented one of the most significant single-day advances in recent months. Meanwhile, the broader Topix index also enjoyed a solid session, rising 62.16 points, or 1.64 percent, to settle at 3,853.81 and buying spread widely across the prime market, lifting sectors that had suffered steep losses earlier in the week.
Much of the positive momentum came from overseas geopolitical updates. Investors breathed a sigh of relief after U.S. President Donald Trump announced that negotiations for a diplomatic settlement with Iran had reached their final stages. The news immediately cooled tensions in the Middle East, which had previously threatened to disrupt global shipping lanes and critical energy infrastructure.
Following the diplomatic updates, energy markets reacted swiftly. The price of benchmark West Texas Intermediate crude oil futures plunged back below the psychological threshold of $100 per barrel. This sharp drop in oil eased widespread fears about sticky global inflation. Since Japan imports almost all of its fossil fuels, cheaper oil directly translates to lower operational costs for Japanese corporations and less pressure on consumer wallets.
The easing of inflation fears had an immediate impact on the fixed-income market. The yield on the benchmark 10-year Japanese government bond declined by 0.025 percentage points, closing at 2.760 percent. Lower bond yields generally indicate that investors expect a less aggressive approach from central banks regarding interest rate hikes. This shift in expectations provided a highly supportive backdrop for equity markets, especially high-growth technology firms.
In the currency markets, the U.S. dollar remained relatively stable against the Japanese yen. The greenback traded mostly in the upper 158-yen range in Tokyo as investors pulled money out of safe-haven assets. At 5 p.m. in Tokyo, the dollar was trading at 159.02-159.04 yen, compared to its New York level of 158.87-158.97 yen and Wednesday’s Tokyo close of 159.06-159.08 yen. A stable yen helps major Japanese exporters forecast their overseas earnings more reliably.
At the same time, the euro traded at $1.1607-1.1608 and 184.58-184.62 yen. These figures compared to $1.1620-1.1630 and 184.70-184.80 yen in New York late Wednesday. The European currency also showed modest changes against its late Wednesday afternoon level in Tokyo, where dealers had quoted it at $1.1592-1.1594 and 184.39-184.43 yen.
Technology stocks spearheaded the rally on the Tokyo Stock Exchange. SoftBank Group led the charge after media reports emerged that OpenAI, the creator of ChatGPT, is making concrete preparations to file for an initial public offering. Because SoftBank has heavily invested in OpenAI and other high-profile artificial intelligence companies, the prospect of a massive public listing has sparked intense buying interest among market participants.
Global chipmaker Nvidia also contributed to the positive market atmosphere. The American company posted stellar quarterly earnings that surpassed Wall Street projections, validating the ongoing global demand for high-performance artificial intelligence chips. While Japanese investors remained slightly cautious about how Wall Street would react in the upcoming session, strong earnings figures gave a direct boost to local electronics manufacturers and semiconductor equipment suppliers.
On the Prime Market, the sectors that recorded the strongest gains included information and communication, electric appliances, and glass and ceramics products. Many of these stocks had fallen significantly over the previous five sessions, making their current valuations highly attractive to bargain hunters.
Market analysts noted that a technical rebound was overdue for the Japanese market. Toshikazu Horiuchi, an equity strategist at IwaiCosmo Securities, explained that Tokyo shares had entered oversold territory. This technical condition naturally invited buyers back into the market, transforming the positive external news into a powerful, broad-based rally.
