Nikkei Climbs as Auto Sector Gains and Trade Tensions Ease

Tokyo’s Nikkei index experienced an upswing on Monday, setting the stage for a potential four-day rally. Automobile stocks led the gains following an announcement from Toyota Motor regarding a possible investment in Toyota Industries, a key supplier.

Investor confidence was further boosted by indications of easing tensions in Sino-US trade relations. On Friday, President Donald Trump stated he had communicated with Chinese President Xi Jinping.

While Beijing has denied that direct discussions are ongoing, it has granted exemptions on tariffs for certain US goods.

As of the midday recess, the Nikkei had risen by 0.5% to reach 35,887.89. Earlier, the index peaked at 36,075.26, surpassing the 36,000 mark for the first time since April 1. The index is aiming for its first four-day winning streak since January.

The broader Topix index increased by 1%. Trump also mentioned the nearing completion of a tariff agreement with Tokyo on Friday, though specifics were not provided. Ryosei Akazawa, Japan’s economy minister, is scheduled to visit Washington starting Wednesday for further discussions.

Maki Sawada, a strategist at Nomura, noted that US tariff negotiations are creating optimism that is bolstering stock markets. However, with a national holiday approaching in Japan and a week full of earnings reports, investors may be hesitant to aggressively pursue higher market gains.

Sector Performance and Key Movers

Transport equipment stocks showed significant growth, rising by 4.3% and leading the Tokyo Stock Exchange’s 33 industry sectors. Toyota Motor shares saw a substantial increase of 5.5%.

Toyota is considering investing in a possible buyout of Toyota Industries. Shares of Toyota Industries experienced high demand, remaining untraded and poised to increase by the daily limit of 23% at market close.

Bloomberg News reported that Akio Toyoda, Chairman of Toyota, and his family have suggested acquiring Toyota Industries in a deal potentially valued at 6 trillion yen ($41.75 billion).

However, Advantest, a chip-testing equipment manufacturer and Nvidia supplier, experienced a notable decline of 5.4% after its profit forecast fell short of analyst expectations.