TOKYO - The Nikkei Stock Average climbed sharply again on May 22nd, closing at a record high of 63,339 as investor sentiment improved on expectations that fighting between the United States and Iran could soon come to an end.
The benchmark index finished 1,654 points higher than the previous day, surpassing the previous record of 63,272 set on May 13th. At one point during trading, the Nikkei rose more than 1,700 points and briefly moved into the 63,400 range.
The rally was fueled by easing concerns over the Middle East situation, with reports suggesting the United States and Iran were nearing an agreement to halt hostilities. As fears surrounding the conflict subsided, gains in crude oil futures prices slowed, helping ease concerns over a global economic slowdown.
US stocks also supported sentiment, with the Dow Jones Industrial Average hitting a record high for the first time in around three months. AI- and semiconductor-related shares continued to attract strong buying in both US and Japanese markets.
Among the standout performers was SoftBank Group, which surged 11%. Investors reacted positively to speculation surrounding a future IPO by OpenAI as well as continued gains in shares of chip designer Arm Holdings, in which SoftBank holds a major stake. Arm shares jumped 16% in US trading on May 21st after strong earnings from NVIDIA boosted expectations for AI-related chip demand.
Market attention also focused on memory chip maker Kioxia Holdings, which rose nearly 4%. Analysts noted that Kioxia recorded trading value exceeding 3 trillion yen on May 21st, reportedly the first time a single stock in Japan reached that level.
Other semiconductor and AI-related shares, including Renesas Electronics and Fujikura, also posted strong gains as investors continued concentrating on AI-linked stocks.
Meanwhile, Japan's long-term interest rates, which briefly reached 2.8% earlier this week for the first time in roughly 29 and a half years, stabilized, helping support equity markets. Rising yields had previously triggered selling in semiconductor stocks, but the pause in rate increases encouraged investors to return to growth sectors.
Despite the record high in the Nikkei, gains across the broader market remained uneven. The TOPIX index rose only about 1.1%, significantly less than the Nikkei’s 2.6% increase, while roughly 40% of Prime Market-listed stocks declined. Analysts said the market remained heavily concentrated in a limited number of AI and semiconductor names.
Shares of Sony Group and Toyota Motor lagged behind the broader rally, while insurance giant Tokio Marine Holdings fell nearly 4%.
Market analysts cautioned that overheating concerns are growing after the Nikkei gained more than 3,400 points over just two trading sessions. They warned that volatility could continue next week depending on developments in the Middle East and whether US markets can maintain their momentum amid persistently high oil prices and inflation concerns.
Expectations for further interest rate hikes by the Bank of Japan also remain strong after several policymakers signaled support for additional tightening to combat inflation. Analysts said that if crude oil prices remain elevated due to geopolitical risks, pressure on prices and interest rates could intensify further.
Source: TBS
