Japanese Shares Track Wall Street Higher

Asian equity markets advanced on Wednesday, tracking a rally on Wall Street overnight that lifted the Dow and S&P 500 to fresh record highs, supported by robust corporate earnings and a sharp drop in oil prices. Investors weighed reports of an imminent interim agreement between the US and Iran to reopen the Strait of Hormuz, a development that could ease inflation concerns and reduce expectations for near-term Federal Reserve interest rate hikes. Technology-heavy markets in Japan and South Korea led regional gains, with the Nikkei 225 and KOSPI Composite both surging more than 3%. Among individual stocks, Japanese tech-investing giant SoftBank Group soared more than 10%, while South Korean chipmaker SK Hynix climbed 6%.

The Nikkei 225 Index jumped 3.3% to above 66,000, while the broader Topix Index advanced 1.2% to 4,009 on Wednesday, extending gains from the previous session as Japanese equities followed Wall Street higher after the Dow and S&P 500 closed at fresh record highs. Global market sentiment was also lifted by a sharp drop in oil prices amid rising optimism over an interim agreement between the US and Iran to reopen the Strait of Hormuz. Domestically, data showed real wages increased for a sixth consecutive month in June, reinforcing the case for additional Bank of Japan interest rate hikes. Technology stocks led the rally, with Kioxia Holdings climbing 7.4%, Ibiden Co gaining 5.1%, Advantest rising 5.7%, Lasertec adding 4.2%, and SoftBank Group jumping 7.8%. Other heavyweight stocks also posted solid gains, including JX Advanced Metals (3.8%), Mizuho Financial (1.7%), and Sony Group (2.7%).

The Nikkei 225 Index rose 0.32% to close at 63,957 on Tuesday, recovering from earlier losses as a rebound in select technology stocks helped lift the market, with the recent selloff in artificial intelligence-related shares showing signs of easing. Top gainers included Kioxia Holdings (6%), Fujikura (7.9%), Tokyo Electron (3.1%), Taiyo Yuden (3.8%) and Lasertec (7.8%). Meanwhile, financial and consumer stocks continued to weigh on the indexes, with notable declines from Mitsubishi UFJ (-2.7%), Sumitomo Mitsui (-1.5%) and Fast Retailing (-1.1%). Investors also continued to assess the yen’s sharp appreciation following coordinated efforts by Japan and the US to support the currency, while remaining alert to the possibility of further intervention. A stronger yen clouds the earnings outlook for Japan’s export-oriented companies and makes domestic equities less attractive to foreign investors.