Nikkei Surges to Three-Week Peak Amid Trade War Thaw

Tokyo’s Nikkei index attained its highest level in three weeks on Thursday, mirroring an overnight tech-driven surge on Wall Street. The rise occurred as the White House indicated a potential de-escalation in its trade tensions with China.

A revitalized dollar against the yen offered supplementary momentum, while a report suggesting that President Trump might exempt automotive firms from certain tariffs further bolstered the value of auto stocks.

The Nikkei index increased by 1.1% by the midday break, hitting 35,287.95, a mark unseen since April 2. On that day, former President Trump surprised global markets with aggressive tariff impositions. The broader Topix index also experienced a 1% rise.

U.S. Treasury Secretary Steven Mnuchin stated on Wednesday that the current high tariffs between the U.S. and China are untenable. He suggested that a trade separation between the two nations is not in anyone’s best interest, signaling a willingness from the White House to engage in discussions.

Japanese Finance Minister Shunichi Suzuki is expected to meet with Mnuchin in Washington, D.C., coinciding with the International Monetary Fund and World Bank annual meetings.

Mnuchin clarified that he does not have specific currency targets as part of ongoing bilateral trade talks, a change from earlier accusations that Tokyo was deliberately weakening its currency to benefit exporters.

The automotive sub-index surged by 3.6%, ranking as the second strongest performer among 33 industry groups, trailing only nonferrous metals, which saw a 4.4% increase.

Toyota Motor shares rose by 4.7% following an announcement of an additional $88 million investment in a West Virginia plant.

Semiconductor stocks experienced substantial gains, with Tokyo Electron and Advantest leading the Nikkei’s index-point movers. Nintendo shares increased by 5.4% due to high initial demand for the upcoming Switch 2, exceeding the company’s production capabilities.

Fanuc, a robot manufacturer, saw its shares advance by 3.2% due to robust financial results. However, the company refrained from providing forecasts for the current fiscal year, citing uncertainties in global trade. Japan’s earnings season is gaining momentum this week.

Strategist Maki Sawada from Nomura noted, “If the number of companies withholding full-year guidance increases, the uncertainty surrounding corporate performance will also increase, which will weigh on the stock market. Investors should monitor this theme.”