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Nikkei 225 Surges 2.1% on Trade Optimism, Yen Weakness

Word on the StreetMonday, May 12, 2025 9:07 pm ET

1min read

The Nikkei 225 index experienced a significant surge, rising by more than 2% and closing at 38,446.70 points, marking a 2.1% increase. This upward momentum was driven by improving expectations for trade relations, which bolstered investor confidence in the Japanese market. The automotive and banking sectors were the primary contributors to this rally, with Toyota Motor Corporation leading the automotive sector with a 4.3% gain and Mitsubishi UFJ Financial Group spearheading the banking sector with a 5.0% rise.

The weakening of the Japanese yen further stimulated market activity, as it made Japanese exports more competitive in the global market. The dollar strengthened against the yen, trading at 148.11 yen, up from 146.03 yen at the previous day's close. This currency dynamic added to the overall bullish sentiment in the market.

In addition to the automotive and banking sectors, the pharmaceutical sector also saw gains. Daiichi Sankyo, a major pharmaceutical company, saw its stock price increase by 7.6%, while Eisai, another prominent player in the industry, experienced a 4.8% rise. This recovery followed a significant decline in the sector the previous day, indicating a rebound in investor interest.

The market's focus remains on corporate earnings reports, with Hitachi scheduled to release its financial results later in the day. Investors are closely monitoring these reports to gauge the health of the Japanese economy and the performance of key industries. The positive market sentiment is expected to continue as long as trade relations remain favorable and the yen stays weak, supporting the competitiveness of Japanese exports.

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