Nikkei Soars, Tokyo Stock Exchange Lifts Hopes for Iran Peace
Tokyo - The Tokyo Stock Exchange strengthened sharply on Friday morning. Citing Kyodo News, Friday, June 12, the Nikkei index jumped more than 4 percent after the market saw the possibility of a conflict in the Middle East easing.
The Nikkei 225, an index containing 225 major stocks in Japan, rose 2,225.68 points, or 3.47 percent, from Thursday's close to 66,442.95. The Topix index, which reflects the broader movement of stocks on the Tokyo Stock Exchange, also rose 63.12 points, or 1.65 percent, to 3,893.47.
Nikkei even broke through the 67,000 level for the first time in more than a week. The main impetus came after US President Donald Trump said a peace deal with Iran could be signed in a few days.
The market also got a fresh wind from the decline in the benchmark West Texas Intermediate crude oil price below US$90 per barrel. West Texas Intermediate is a benchmark for US crude oil prices. Lower oil usually helps ease concerns about inflation and energy costs.
However, the atmosphere is not completely calm. The US dollar strengthened slightly to below 160 yen in Tokyo as Iran still showed a tough stance.
At midday, the dollar was at 160.29-160.30 yen. The figure was compared to 159.88-159.98 yen in New York and 160.50-160.51 yen in Tokyo on Thursday at 17.00.
The euro was trading at US$1.1567 and 185.40-185.44 yen. In New York, the euro was previously at US$1.1574-1.1584 and 184.88-184.98 yen.
In addition to geopolitical factors, technology stocks also became fuel for the rally. Shares related to artificial intelligence or AI and semiconductors rose sharply, following the strengthening of similar stocks on Wall Street.
"The trend over the past week, when the market was driven by heavyweight stocks related to AI and chips, is back in sight today," said Maki Sawada, strategist at Nomura Securities Co.
The technology rally also made Kioxia Holdings Corp. briefly Japan's largest publicly traded company by market capitalization, surpassing Toyota Motor Corp. Market capitalization is the value of a company's market based on share price multiplied by the number of outstanding shares.
The big rise in the Nikkei shows investors are quick to respond to news of peace and a rally in technology stocks. However, the direction of the market is still easy to change as long as the certainty of the Iran deal and the movement of oil prices are not really clear.