Japan's Nikkei 225 advanced 0.86% to 70,062.32 in the latest session, building on its remarkable quarterly performance. The benchmark index is poised for a 36% gain in the past three months, representing the sharpest quarterly advance in data going back to 1965. The broader Topix also advanced, rising 0.73% to 4,010.88. This continued momentum follows the index's previous session where it closed at 70,062.32, achieving its sharpest quarterly gain in decades. The latest session was supported by a strong US session overnight where stocks finished higher and the Dow closed at a record closing high above 52,000 for the first time ever, with the blue-chip index jumping 306.63 points, or 0.59%. According to Bloomberg, US index futures steadied on the last day of a quarter that's set to go down as the biggest gain in six years, with the S&P 500 surging 1.18% and the Nasdaq Composite gaining 2.07% in Monday's regular session.
The latest session was dominated by technology stocks, with 149 advancers against 72 decliners on the Nikkei 225, indicating broad-based participation in the tech rally. The largest percentage gainers included Rakuten Group (up 5.39%), Tokyo Electron (up 5.09%), and Fujikura (up 5.06%). Earlier sessions had seen Taiyo Yuden (up 8.28%), Furukawa Electric (up 7.04%), and Screen Holdings (up 6.20% to a record high). However, market breadth remained mixed with 104 advancers against 121 decliners at the close of previous sessions, indicating selective participation in the tech-driven advance. As Marija Veitmane, head of equity research at State Street Global Markets, noted, "US futures are being supported by renewed demand for tech, with investors returning to the view that IT offers one of the few strong and reliable earnings-growth stories." Across global markets, European tech stocks followed suit with ASML and ASMI gaining 3.3% and 1.3% respectively, while Be Semiconductor shares rose by more than 2%.
The positive movement in Japanese markets was driven by reports that the United States and Iran have agreed to halt hostilities and allow commercial vessels to pass through the key Strait of Hormuz waterway. A U.S. official told CNBC on Sunday that "both sides will stand down for now and vessels can move freely." U.S. stocks ended sharply higher overnight, with the Dow hitting a record closing high above 52,000 for the first time ever, as reported by Reuters. The rally was boosted by a nearly 5% gain in Alphabet during the "Magnificent Seven" giant's first trading session as a Dow member. Sony Financial Group analysts noted that reports that working-level talks between the U.S. and Iran are expected to take place should also provide support for stock prices. However, analysts cautioned that as institutional investors are expected to adjust their portfolios ahead of the end of the quarter today, volatile price movements are possible. The improved global risk sentiment has contributed to the broader move toward equities across markets, with European stocks following their U.S. counterparts higher on Tuesday morning, with the regional Stoxx 600 adding 0.6%.
Asia-Pacific markets were mixed in afternoon trade, tracking gains on Wall Street overnight. South Korea's Kospi gained 0.97%, buoyed by the government's plans for a massive AI investment drive and a 3.4% gain in Samsung stock. According to UBS strategists, despite an optimistic start to the week, concerns over the sustainability of AI capex growth remain. The positive momentum in Asian markets reflects the broader risk-on sentiment driven by the easing of US-Iran tensions and strong US market performance. On the domestic front, Japan's May industrial output data showed factory output rose 0.5% month-on-month, below expectations, according to Reuters. However, manufacturers forecast a stronger 3.7% increase in June, signaling potential resilience in manufacturing.
