Nikkei surges as optimism for Iran peace plan lifts sentiment

[TOKYO] Japan’s Nikkei share average climbed roughly 3 per cent on Wednesday, supported by cautious optimism that the Middle East crisis could move toward a potential settlement after recent volatility.

The benchmark Nikkei 225 Index advanced 2.93 per cent to 53,784.43. The broader Topix climbed 2.5 per cent to 3,648.78.

US President Donald Trump said on Tuesday the US was making progress in its efforts to negotiate an end to war with Iran. Like many global markets, Japanese stocks have gyrated on conflicting signs of escalation of the crisis or an off-ramp to hostilities.

Because of its dependence on imported energy, Japan’s economy is particularly vulnerable to the conflict’s impact on oil shipments and prices.

The sharp decline in crude on Wednesday appeared to be the trigger for a jump in the Nikkei, said Wataru Akiyama, a strategist at Nomura Securities.

“Expectations for a lowering of tensions in the Middle East appear to be driving the stock market higher,” Akiyama said. “However, the sense of uncertainty has not yet been completely eliminated.”

Japan’s Nikkei 225 saw broad-based gains, with 211 stocks advancing compared with just 14 decliners.

Leading the rally was Tokio Marine Holdings, which surged 9.8 per cent and climbed for a second consecutive session after Berkshire Hathaway disclosed it had acquired a stake in the insurer.

It was followed by strong performances from Furukawa Electric, which rose 8.7 per cent, and SoftBank Group, up 8 per cent. Both companies benefited from continued momentum in artificial intelligence-related investments.

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On the downside, Inpex Corporation slipped 2.6 per cent, making it the biggest laggard of the session, followed by Nomura Research Institute, which declined 2.2 per cent. REUTERS