TOKYO - Japan’s benchmark stock index closed above the 65,000 level for the first time on May 25th, as optimism over easing tensions in the Middle East and continued enthusiasm for AI-related shares pushed the market to another record high.
The Nikkei Stock Average ended the day at 65,158, up 1,819 yen from last Friday, marking a new all-time closing high. Investors accelerated purchases of AI- and semiconductor-related stocks after progress in negotiations aimed at ending fighting between the United States and Iran raised hopes that shipping through the Strait of Hormuz would normalize.
The rally followed record highs on Wall Street late last week, while declines in U.S. crude oil futures and lower interest rates also supported investor sentiment.
The Nikkei advanced for a third straight session, briefly gaining more than 2,000 yen during trading. The broader TOPIX index also rose for a third consecutive day and surpassed its previous record high set in February, while the TSE Growth Market 250 Index climbed 1.7%.
Market participants said the speed of the rally had exceeded expectations, with gains concentrated in a relatively small group of heavily weighted “Nikkei-type” stocks that strongly influence the benchmark index.
Among the standout performers was Kioxia Holdings, whose shares rose above 60,000 yen for the first time and reached another record high ahead of its investor day scheduled for June 2nd. Investors are closely watching whether the company will announce stronger shareholder return measures, including dividends.
SoftBank Group also hit its highest level in seven months, supported by expectations surrounding OpenAI and rising valuations for chip designer Arm Holdings.
Other major gainers included Advantest, Tokyo Electron, TDK, and Taiyo Yuden, with Taiyo Yuden surging to its daily limit amid expectations for higher prices for multilayer ceramic capacitors (MLCCs) used in AI servers.
Analysts noted that despite the sharp rise in the Nikkei, declining stocks still outnumbered advancing ones on the Tokyo Stock Exchange Prime Market, highlighting how concentrated the buying activity had become.
Attention also focused on a sharp rise in market volatility, with the Nikkei Volatility Index climbing to around 33 even as stock prices surged. Market observers said this reflected aggressive demand for call options as investors rushed to adjust positions after underestimating how quickly the Nikkei could approach the 65,000 and even 70,000 levels.
Foreign investors continued to dominate buying activity. Analysts cited feedback from the Morgan Stanley MUFG Pan Summit 2026, where overseas investors reportedly expressed strong confidence in Japanese equities and the durability of the AI-driven rally.
Some overseas investors were also said to be increasingly bullish on Japanese bank shares, particularly if the Bank of Japan continues raising interest rates toward 2%.
Trading value on the TSE Prime Market remained elevated at approximately 9 trillion yen. Although 870 stocks declined versus 664 gainers, heavyweight semiconductor and electronics shares continued to push both the Nikkei and TOPIX to fresh records.
Taiwan’s stock market also hit a new high on May 25th, gaining more than 3%, while U.S. stock futures remained firm.
