The Nikkei 225 index crested above the 60,000 mark for the first time in history on Thursday, before Japanese stocks settled back to end on slender losses for the day.
The Nikkei tipped the scale at 60,013.98 minutes after the start of Thursday’s trade. That reset last week’s intraday record.
The Nikkei, skewed toward blue chips and major exporters, settled back on a 0.8% decline on Thursday but is now up 17.5% since the start of the year, with a slim 0.5% gain since the start of the Iran war.
Prepping for Earnings Season
Investors are prepping for Japanese companies to start reporting earnings in the next few weeks. These will be full-year figures for the last fiscal year, which ended on March 31 for Japanese companies. Much will be made of the forecasts and guidance that companies give on operations in the year ahead.
Tokyo shares have seen tech companies and exporters outperform domestic plays to an unusually large degree, thanks to oil prices and the Japanese yen.
The new Nikkei record is a strong showing considering the threat to Japan’s energy supplies. The country imports all its oil, with 90% of it passing through the Strait of Hormuz under normal circumstances.
Japan is for now falling back on its energy reserves. In the meantime, the major exporters that dominate “Japan Inc.” are benefitting from Japan’s prowess in electronics as well as the extraordinarily weak Japanese yen.
Tokyo Chipmakers Lead the Way
Thursday’s gains were propelled by tech. Chipmaker Renesas Electronics RNECY (T:6723) shot up 6.7% ahead of its scheduled earnings release on Friday.
The company specializes in the microcontrollers and microprocessors that power machines of all kind, from heavy industry through cars to household devices. Its chips allow devices to run artificial intelligence directly on the equipment rather than relying on the cloud.
The only other company to outdo those Renesas gains today is the “fabless” chip designer Socionext (T:6526), which is up 7.1%.
Socionext, which specializes in “system-on-chip” integrated circuit design, is due to report earnings on April 28, moving higher today after peer Texas Instruments (TXN) reported strong results after the bell on Wednesday, sending its shares soaring 18.4% on Thursday.
My pick for the Asia stock of the year, a case I made in December 2025, is chip-equipment testing maker Advantest ATEYY (T:6857). It is flat on Thursday but up a heady 42.1% year to date.
SoftBank Shoots Up on AI
Another favorite tech play of mine, Softbank Group (SFTBY) (T:9984) saw its shares climb 3.9% on Thursday. It’s not directly tied to chipmaking but, as I said in February, is essentially a listed tech venture-capital fund and represents the smartest backdoor play into OpenAI before any initial public offering.
SoftBank is reportedly seeking a $10 billion margin loan secured by its shares in OpenAI, money that the venture-capital investor intends to put to work elsewhere in the artificial intelligence space. Founder Masayoshi Son says he is “all in” on what he calls artificial super intelligence, which he believes will emerge in the next decade.
SoftBank is also expanding operations at its Arm Holdings (ARM) chip-design subsidiary. Arm, separately listed but 90% held by SoftBank, is seeing a 6.1% lift in its shares on Thursday.
Takaichi Trade Continues
Beyond tech, Tokyo stocks were already riding high after the election win in February for Japanese Prime Minister Sanae Takaichi. I examined those implications after Takaichi’s high personal popularity rating overcame investor dissatisfaction with her Liberal Democratic Party to deliver a record number of seats and restore the LDP’s majority in the Lower House of Japan’s parliament.
Takaichi is a disciple of the late Shinzo Abe and his “Abenomics” reforms, pushing policies that stimulate the stock market while seeking to keep interest rates and borrowing costs low. But her policies generally lead to a weaker yen, delivering a record stimulus budget last year and promising to scrap an unpopular sales tax on food for two years, a measure economists say that Japan, with the heaviest public debt load among major nations, can hardly afford.
The broad-market Topix, tracking almost all the stocks listed in Tokyo, remains lower than its levels before the United States and Israel first attacked Iran on February 28. It is down 5.6% from its all-time highs set on February 27, but nevertheless up 9.0% year to date.
Unusual Lag for Domestic Stocks
It is unusual for the 9.0% Topix gain to lag the 17.5% gain in the Nikkei by such a large margin. So we can see that Tokyo’s advance has been led by multinationals making profits abroad and repatriating them back into Japanese yen, which will magnify profits. By contrast, domestic companies with no international sales face higher input and import costs.
The Japanese yen is just shy of ¥160 to the U.S. dollar, 38.7% weaker than the ¥114 rate at the start of 2022. The yen really started weakening dramatically that year, and each rally has been quickly undone. At the start of this decade, the exchange rate was ¥109, a “normal” level against the U.S. dollar.
Japan’s finance minister, Satsuki Katayama, reiterated on Thursday that Tokyo and Washington are in constant, close contact over exchange rates. She says the two governments are in “even closer communication than before,” intensifying remarks she made last week as she visited Washington and met with U.S. Treasury Secretary Scott Bessent.
Japanese policymakers frequently try to talk the yen down via verbal warnings, and on Thursday Katayama warned of “bold action” if necessary, coded language that implies intervention in the currency markets. That oil is normally priced in U.S. dollars magnifies the importance of the weak yen, inflating energy costs that are already sky-high.
The central Bank of Japan would desperately like to raise interest rates. But each time the Japanese economy and wage gains look strong enough for it do so, destabilizing events such as last year’s tariff tantrum and this year’s Middle East war have caused the central bank to shift back to a neutral stance.
Consumer Plays Undo Tech Advance
Thursday’s rally was undone by losses in companies such as Uniqlo parent Fast Retailing FRCOY (T:9983), which ended Thursday down 3.4%. It has sold down since a 12.0% stock gain on April 9, when it reported a strong first half of an unusual fiscal year that runs through August. The shares are still up 21.7% on the year even after the correction over the last nine trading days.
There was a lag from other companies focused on consumer goods as well as the domestic Japan market.
Camera maker Nikon NINOY (T:7731) shed 10.4% on Thursday, its second day of heavy losses. It’s now down 14.3% since Tuesday’s close, pushing it into the red for the year so far with a 2.7% year-to-date decline.
Nikon is due on May 8 to report full-year figures for the fiscal year that ended in March. It is looking at a loss, having revised an initial profit estimate of ¥14 billion to a massive ¥100 billion operating loss for the year, with the company hurt to the tune of ¥7.5 billion ($43 million) by U.S. tariffs, but it is also contending with a product mix skewed toward lower-margin budget-friendly cameras and faces a ¥90.6 billion ($568 million) impairment loss stemming from its buyout of all minority shareholders in its Nikon SLM Solutions unit in Germany.
Nuclear Slow to Resume
Power-station operator Tokyo Electric Power Co. (TEPCO) TKECY (T:9501) saw its shares sell off 6.5% on Thursday, ahead of the company’s schedule to release full-year figures on April 30. It is expecting a large loss, having reported a net loss of ¥663.7 billion ($4.2 billion) for the first nine months of the year.
The utility last week resumed commercial operations at the No. 6 reactor of the Kashiwazaki-Kariwa plant, the largest nuclear power station in the world. It was mothballed for 14 years after the 2011 Fukushima Daiichi meltdown.
TEPCO, which also operated the Fukushima plant, attempted to restart operations at No. 6 in January but a safety alert forced the company to immediately suspend efforts. This is TEPCO’s first nuclear reactor to come back online since the 2011 disaster.
The closure of the Strait of Hormuz leaves the world’s fourth-largest economy, according to IMF data, in a perilous position. Japan was an early adopter of nuclear power but shut down all 54 of its reactors after the 2011 disaster. Japan has now resumed operations at 15 of the 33 operable reactors. But it still relies on sources outside Japan for 85% to 90% of its energy needs.
Investors are looking past those concerns, given Japan’s oil reserves equivalent to 254 days of demand, the largest in Asia. But we still see daily oscillations based on oil prices. The progress for the Tokyo market could be undone if the war persists in the Middle East, given that markets have priced in a ceasefire, and a gradual resumption in energy supply.
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