Japan's Nikkei 225 Hits Record High as US-China Tariff Pause Lifts Market Mood

Japan’s benchmark Nikkei 225 index hit a record high on August 12, buoyed by signs of easing trade tensions between the US and China and renewed optimism around the global economic outlook.

The benchmark climbed as much as 1.1% to 42,298.21, surpassing its previous peak set in July 2024. The broader Topix index also moved higher, extending its gains after reaching an all-time high late July.

The rally was aided by news that Washington will extend a tariff truce with Beijing for another 90 days, giving markets some relief after months of uncertainty over global trade. Export-focused names such as Sharp Corp and semiconductor-testing equipment maker Advantest Corp were among the biggest gainers, reflecting hopes that fewer trade barriers could support overseas demand.

Last week, Japanese shares had already seen an upmove following comments from the country’s top trade negotiator, who said US officials had indicated plans to end the stacking of universal tariffs on Japan and to follow through on earlier pledges to cut car levies. A senior US official confirmed on Friday that an announcement was being finalised.

While the Nikkei has lagged the Topix this year partly because of its weightage tilt towards exporters, which left it more vulnerable to tariff concerns, the easing of those worries has helped narrow the gap. Technology and automotive stocks were in focus, while SoftBank Group continued its winning run, rising as much as 8% on the day. The investment group has now gained for five consecutive sessions, benefiting from improved sentiment and investor rotation into high-profile names.

Market mood was also supported by expectations that the US Federal Reserve could adopt a more accommodative policy stance later this year. Recent changes at the Fed and softer US labour market data have reinforced speculation that the central bank may pause or even reverse its tightening path, easing pressure on global equities.