Tokyo’s Nikkei 225 jumps nearly 6% on hopes for reopening the Strait of Hormuz

Global Markets Rally as Tokyo’s Nikkei Surges to New Record, Oil Prices Stabilize

World equity markets surged Thursday, with Tokyo’s Nikkei 225 index rocketing nearly 6% to a fresh all-time high as investors closely monitored developments between the United States and Iran that could potentially reopen key oil shipping routes in the Persian Gulf.

The Nikkei 225 jumped an astounding 3,300 points to close at 63,086.00 as trading resumed following Japan’s “Golden Week” holidays. The benchmark has gained approximately 20% over the past three months and more than 70% in the past year, fueled primarily by strong investment in technology shares riding the artificial intelligence boom.

“I think it’s a kind of bubble because buying activity concentrated on leading AI, artificial intelligence stock and semiconductor-related stocks. It’s a situation where only semiconductor stocks are being bought,” said Takashi Hiroki, chief strategist at MONEX.

Technology stocks led the rally in Tokyo, with computer chip equipment maker Tokyo Electron surging 9%, testing equipment manufacturer Advantest Corporation climbing 6.8%, and Shin-Etsu Chemical adding 8.5%.

The positive sentiment extended across Asia, with Taiwan’s Taiex surging 1.9%, boosted by semiconductor giant TSMC’s 3.1% gain. South Korea’s Kospi reversed early losses to close 1.4% higher at 7,490.05, marking its second consecutive record-setting day after Wednesday’s nearly 7% jump that pushed it past the 7,000 threshold for the first time. Hong Kong’s Hang Seng index gained 1.7% to 26,668.37, while Australia’s S&P/ASX 200 rose 0.8%.

European markets opened cautiously higher, with Germany’s DAX edging up 0.2% to 24,988.08 and France’s CAC 40 rising 0.3%. Britain’s FTSE 100 bucked the trend, slipping 0.3% to 10,411.19.

U.S. futures suggested a continued positive trend, with S&P 500 futures up 0.1% and Dow Jones Industrial Average futures climbing 0.3%.

The global market rally began Wednesday after former President Donald Trump suggested the Strait of Hormuz could be “OPEN TO ALL” if Iran accepts a proposed agreement. This potential breakthrough sent oil prices plunging nearly 8% and lifted the S&P 500 by 1.5% to a fresh record, while the Dow industrials jumped 1.2% and the Nasdaq composite rose 2%.

However, tensions remain high in the region. The U.S. military reported firing on an Iranian oil tanker Wednesday, disabling its rudder as the vessel allegedly attempted to breach an American blockade of Iran’s ports. This action came as Trump sought to pressure Tehran into reaching a deal to end the conflict.

Oil prices have been volatile in response to these developments. Brent crude, the international benchmark, briefly fell below $97 per barrel before rebounding above $100 after Trump threatened to intensify bombing if Iran rejected his proposed agreement. By early Thursday in Asian trading, Brent crude was down 30 cents at $100.97 per barrel, while U.S. benchmark crude slipped 37 cents to $94.71.

The effective closure of the Strait of Hormuz poses a significant threat to the global economy, as it has prevented oil tankers from using this critical chokepoint to exit the Persian Gulf. Approximately 20% of the world’s oil supply passes through the strait, and disruptions have put upward pressure on inflation, affecting prices for consumer goods worldwide.

Despite geopolitical concerns, U.S. stocks have demonstrated resilience, supported in part by strong corporate earnings reports. Chipmaker AMD exemplified this trend, surging 18.6% after exceeding expectations for both profit and revenue.

In currency markets, the U.S. dollar held steady against the Japanese yen at 156.39, while the euro rose slightly to $1.1752.

Analysts note that if a diplomatic solution allows for the reopening of the Strait of Hormuz, it could provide significant relief to global supply chains and potentially ease inflationary pressures that central banks worldwide have been battling.