Tokyo stocks end up over 3% at 1-year highs on Japan-US tariff deal
The market was further lifted by investors hoping for a new Japanese government as Prime Minister Shigeru Ishiba's resignation is viewed as inevitable, following the major setback for the governing coalition in Sunday's House of Councillors election.
The 225-issue Nikkei Stock Average advanced 1,396.40 points, or 3.51 percent, from Tuesday to 41,171.32, its highest level since July 16, 2024. The broader Topix index finished 90.19 points, or 3.18 percent, higher at 2,926.38.
All industry sectors advanced on the top-tier Prime Market, with gainers led by transportation equipment, bank and metal product issues.
The U.S. dollar briefly weakened to the lower 146 yen range in Tokyo as the Japan-U.S. trade deal helped ease concerns over the prospects for the Japanese economy, boosting the yen.
But the U.S. currency later strengthened to the lower 147 yen level at one point as the yen was sold on worries that Japan's financial health may deteriorate further due to fiscal expansion measures that could be adopted in the future, dealers said.
Such concerns sent long-term interest rates sharply higher. The yield on the benchmark 10-year Japanese government bond hit 1.600 percent, the highest level since October 2008.
Stocks rose across the board, with auto shares surging after Tokyo and Washington agreed that U.S. tariff on automobiles, imposed since April, will be cut to 15 percent from 27.5 percent for Japanese cars.
"Since the Japan-U.S. tariff negotiations had been expected to be prolonged, the market reacted positively as the trade deal was announced relatively soon after the national election" on Sunday, said Masahiro Ichikawa, chief market strategist at Sumitomo Mitsui DS Asset Management Co.
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