Friday’s trading session in Tokyo ended on a celebratory note, with the Nikkei 225 surging 1.1% to a record 44,850.72—its highest close ever. The rally followed fresh GDP data showing the economy grew faster than anticipated in the second quarter, reinforcing the view that Japan’s recovery is gaining traction.
Government figures revealed 1.0% annualized growth between April and June, more than double the consensus forecast, with quarter-on-quarter growth at 0.3% versus the expected 0.1%. The upbeat numbers lit a fire under export-focused industries and capital goods manufacturers, pushing big names like Toyota, Sony, and Hitachi higher by more than 2% each.
The yen also inched higher, trading near 143.65 per dollar. While a stronger currency can weigh on exporters’ overseas earnings, it was seen here as a sign of economic strength and a potential prelude to a more assertive stance from the Bank of Japan on interest rates.
Investor enthusiasm was further buoyed by healthy corporate earnings, particularly among firms with significant global sales. These results suggested that Japanese companies are adapting well to ongoing trade challenges, helped by gradual improvements in supply chain stability.
Still, analysts warned against complacency. Risks tied to U.S. tariffs, inflationary pressures, and unpredictable shifts in global demand could yet test the market’s resolve. For now, though, the Nikkei’s record close reflected broad investor confidence—not just in Japan’s short-term momentum, but in its ability to sustain growth in a turbulent global environment.
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