https://t.co/BPPkXJ62ud [Breaking News] Nikkei Average Surpasses Post-War High, Soars by 3,200 Yen! Trump President’s Announcement of Ceasefire Agreement with Iran Drives Risk-On Capital Inflows by Masaki Okawa [MBA Holder, 31 Published Business Books] #AISummary The Nikkei Average surged amid easing Middle East tensions and rising semiconductor stocks. 🔳 Rapid Rise of the Nikkei Average During the Golden Week holiday, Nikkei futures rose sharply, leading to a nearly 2,600-yen gain in Japanese equities after the holiday. The Nikkei Average broke above 61,000 and approached 62,000, showing strong momentum to surpass its post-war high. 🔳 Primary Drivers of the Rally President Trump’s progress in ceasefire negotiations with Iran, along with growing expectations of a memorandum to avoid military conflict and reach nuclear-related agreements, served as a positive surprise. The absence of strong denials from Iran further improved market sentiment. 🔳 U.S. Stocks and Semiconductor Shares In the U.S. market, the Dow Jones Industrial Average rose 612 points, and the Nasdaq gained 512 points, with semiconductor-related stocks—led by NVIDIA—showing strong performance. The rally in U.S. equities and robust earnings from semiconductor firms spilled over to Japanese stocks, fueling further gains. 🔳 Developments Surrounding the Strait of Hormuz The U.S. signaled its commitment to supporting and securing vessels transiting the Strait of Hormuz, demonstrating monitoring and assistance efforts through its Central Command. Meanwhile, Iran’s tanker traffic faced restrictions, intensifying economic pressure on Iran and creating conditions conducive to ceasefire negotiations. 🔳 Impact of Middle East Tensions Easing This stock rally is viewed as a recovery of losses previously incurred due to Middle East tensions. Without these tensions, the Nikkei could have reached around 63,000; should ceasefire talks advance further, a move toward that level remains possible. 🔳 Investment Strategy While capital continues flowing into semiconductor-related stocks, caution is advised regarding rising margin buying and signs of overheating. A prudent approach involves taking profits incrementally rather than all at once to average entry prices. During rallies, reduce position size; during pullbacks, consider re-entering. 🔳 Stocks to Watch Advantest rose strongly on strong demand for semiconductor test equipment and solid earnings. Taiyo Yuden and Sumitomo Electric Industries also attracted attention as semiconductor and electronic components players. SoftBank Group surged significantly and may be re-entering an uptrend. 🔳 Sector Rotation While Japanese equities have been dominated by semiconductor-driven gains, there are signs that capital may be beginning to rotate into laggard stocks, low-priced issues, and value stocks. Stocks such as Toyota in the mobility sector should be monitored as potential opportunities to be targeted at the right timing. 🔳 Outlook on Monetary Policy A sharp drop in oil prices has made another U.S. rate cut more likely, increasing expectations of a soft landing. Meanwhile, if Middle East tensions ease, Japan could move toward rate hikes. This combination—U.S. rate cuts alongside Japanese rate hikes—could lead to a sustained appreciation of the yen. 🔳 Japan’s Geopolitical Challenges The Middle East situation and Strait of Hormuz issues have highlighted Japan’s vulnerabilities regarding energy dependence and weak defense capabilities. Given Japan’s geopolitical position facing Russia, China, and North Korea, strengthening defense capabilities and alliances is essential. 🔳 Key Points to Watch Going Forward While the Nikkei has room to rise toward 63,000, attention must be paid to accumulating margin buying and potential exhaustion of upward momentum. Carefully monitor overseas investor flows and capital shifts between sectors, remain vigilant against overheating, and adopt a disciplined investment approach.