TOKYO: Japan’s Nikkei share average rallied to an all-time high, while government bond yields tumbled on Monday, after news that the United States and Iran had agreed on a framework for a deal to end their war, fuelling relief across markets.
The Nikkei 225 Index jumped as much as 5.3 percent to 69,527.88 by 0115 GMT. The broader Topix climbed 3.8 percent to 4031.19.
“This is simply the market reacting to the ceasefire deal -nothing more, nothing less. Even a rise of around 4 percent does not look unnatural,” said Shingo Ide, chief equity strategist at NLI Research Institute.
“The key issue going forward will be the substance of the agreement itself, and whether it is actually implemented and upheld.”
Japanese government bond (JGB) yields fell on easing inflation concerns. The benchmark 10-year JGB yield fell 7 basis points (bps) to 2.565 percent, while the 20-year JGB yield slid 7.5 bps to 3.445 percent.
The two-year yield, the one most sensitive to Bank of Japan policy rates, decreased 2 bps to 1.39 percent. Yields move inversely to bond prices.
The Japanese yen strengthened 0.06 percent against the greenback to 160.11 per dollar.
The U.S. and Iran on Sunday agreed to halt the U.S. blockade of Iran and reopen the Strait of Hormuz, a preliminary pact that sent oil prices falling but leaves the fate of Iran’s nuclear programme to further negotiations.
The memorandum of understanding is scheduled to be officially signed on Friday in Switzerland.
Japanese markets have been whipsawed by developments in the Middle East. Japan, which depends on the region for about 95 percent of its oil imports, has seen the yen come under pressure and bond yields rise amid concerns that higher crude prices would lift import costs.