Japan's Topix rallies to record high in trade deal afterglow
The Topix (.TOPX), opens new tab advanced as much as 2.1% to reach 2,986.63 for the first time ever. The Nikkei (.N225), opens new tab gained as much as 2.2% to 42,065.83, crossing the psychological 42,000 mark for the first time since July of last year.
The trade deal announced late on Tuesday by U.S. President Donald Trump reduced a reciprocal rate and autos-specific levies to 15%, from the 25% Washington had threatened previously.
Signs that the European Union may soon agree its own tariff agreement with the U.S. also lifted overall market sentiment.
The rubber index (.IRUBR.T), opens new tab, which includes tyre makers, jumped 3.3% after advancing 2% a day earlier.
The Topix transport equipment index (.ITEQP.T), opens new tab gained just 0.2%, but that followed a nearly 11% surge in the previous session.
On Wednesday, the Topix gained 3.2% and the Nikkei climbed 3.5%.
"This trade deal with the U.S. reaffirms the relationship on both strategic and economic levels," Dan Hurley, portfolio specialist at T. Rowe Price, said in emailed comments.
"On a three- to-five-year basis, we remain constructive on Japan equities," he said. "Valuations are not stretched by any means."
Banks led the equity rally on Thursday, with the sectoral Topix index (.IBNKS.T), opens new tab jumping 3.7% to be top among the bourse's 33 industry groupings.
Lenders have been buoyed by bets that the economic clarity offered by the tariff deal will allow the Bank of Japan to resume interest rate hikes later this year.
The central bank will meet on policy on Wednesday and Thursday of next week, but traders are eyeing October for a potential rate hike, putting the odds at around 57%.
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