Japan’s Nikkei crosses 44,000 for first time on trade, stimulus optimism

TOKYO: Japan’s Nikkei share average climbed past the key 44,000 mark for the first time on Tuesday, as optimism over trade and potential increases in stimulus spending uplifted sentiment.

The Nikkei 225 Index surged as much as 1.24% to an unprecedented 44,185.73 in early trading, before paring gains to enter the midday trading recess up 0.2% at 43,732.80 as the steepness of the rally spurred some profit-taking.

The broader Topix was up 0.06% at the break, after earlier climbing 0.77%.

U.S. tariffs on Japanese autos are set to be lowered by September 16, Japan’s chief tariff negotiator Ryosei Akazawa said in an X post on Tuesday, clearing up ambiguity over a trade deal in July.

Shares continued strong gains from Monday following a resignation announcement from fiscal hawk Prime Minister Shigeru Ishiba. Sanae Takaichi, a proponent of government stimulus and monetary easing, has decided to run in the Liberal Democratic Party’s leadership race, Kyodo news agency reported late on Monday, citing sources familiar with the matter.

“The key point is that unless the ruling coalition can quickly call a general election and regain its Lower House majority, it would continue to operate as a minority government in both houses, whoever wins the LDP leadership election,” BofA Securities analysts said.

“We think the government is likely to adopt a more expansionary stance in the fiscal debates from the autumn, given the need to secure the cooperation of one or more opposition parties, all of which are calling for procyclical fiscal policy.”

Semiconductor-related shares rallied, tracking gains for U.S. peers led by Broadcom, supported by the chipmaker’s statement last Thursday that it expects sharp artificial intelligence-related revenue growth.

The Nikkei’s biggest gainer by far was chip-testing equipment maker and Nvidia supplier Advantest, which rallied more than 7%.

Other notable risers included chip-making tool manufacturers Screen Holdings, which jumped 3.74%, and Tokyo Electron (8035.T), opens new tab, which added nearly 2%.

Sony advanced around 2%.