Japan’s Topix index hit a record high on Thursday, jumping 2% to 2,984.25. This came after Japan and the US finally sealed a big trade deal, easing fears and exciting investors.
The Topix broke past all its past records. The Nikkei index also had a great day, jumping 2% to reach 42,004.92 — the first time it crossed the 42,000 mark since July last year.
Why Did This Happen?
The major reason was a tariff deal announced late Tuesday by US President Donald Trump. The new deal reduced the planned 25% auto tariffs to just 15%. That move gave investors a big reason to cheer.
Market expert Dan Hurley from T. Rowe Price said this shows strong economic and political ties between the two countries. He also believes this trade peace will support the Japanese market for the next few years.
Transport and Rubber Stocks Zoom
Transport equipment stocks on the Topix gained 1% today. This comes after a massive 11% jump just one day before.
The rubber index, which includes tyre makers, also did well. It rose 3.4% today after going up 2% yesterday. These sectors are expected to benefit from better exports and lower tariffs.
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Banks Are Smiling Too
Bank stocks also saw a sharp rise. The Topix banking index jumped 3.6% after rising 4.4% the day before. Why? Because the market thinks the Bank of Japan might now raise interest rates soon. That’s good news for banks, as higher rates often mean higher profits for them.
Some traders believe the central bank may hike rates in October. Others say it’s a 50-50 chance. Either way, the trade deal has brought some needed clarity.
Government Bonds at 2008 High
Japan’s 10-year government bond yields touched 1.6%, matching Wednesday’s levels. This is the highest seen since October 2008. It shows how markets are adjusting to the possibility of rising rates and better growth.
A Market Ready for Takeoff
The Japan’s Topix rally shows investor trust in Japan’s future. The tariff relief, stronger US ties, and hopes for a rate hike are all giving life to Tokyo’s markets. After years of slow growth, Japan might finally be waking up.
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