Key Takeaways
- Asia-Pacific indices rallied sharply, led by a 4.5% jump in the KOSPI and a 2.8% gain in the Nikkei 225, following Wall Street’s lead and optimism over a Middle East resolution.
- SoftBank Group (9984) shares surged 15% amid intense buying interest, marking a standout performance in the Japanese tech sector.
- Japan’s April trade balance recorded a ¥301.9 billion surplus, crushing analyst estimates of a ¥44.5 billion deficit, driven by a 14.8% year-on-year rise in exports.
- JGB yields fell across the curve, with the 30-year yield dropping 8.5 basis points to 4.015% and the 10-year yield easing to 2.745%.
- Gold prices stabilized near $4,540/ounce as reports of a potential United States-Iran truce eased global inflation fears and lowered Treasury yields.
Regional Markets Rally on Easing Geopolitical Tensions
Asia-Pacific equity markets opened significantly higher on Thursday, taking impetus from a strong session on Wall Street. The rally was primarily fueled by falling bond yields and lower oil prices, as investors reacted to increased optimism regarding a potential resolution to conflicts in the Middle East. The Nikkei 225 (+2.8%) and KOSPI (+4.5%) led the regional gains, while Australia’s S&P/ASX 200 climbed 1.3% to 8,606.
Market sentiment shifted toward risk-on assets as the prospect of a US-Iran truce began to permeate trading floors. This cooling of geopolitical rhetoric has helped ease fears of persistent inflation and further interest rate hikes. SoftBank Group (9984) was a primary beneficiary of this shift, with its stock price rallying 15% during early trade.
Japan Reports Strong Trade Data Amid Mixed Economic Signals
Japan’s Ministry of Finance reported a trade surplus of ¥301.9 billion for April, a significant beat against the expected ¥44.5 billion deficit. Exports rose 14.8% year-on-year, outpacing the 9.2% forecast. However, the domestic manufacturing outlook remained clouded as Core Machine Orders for March fell 9.4% month-on-month, missing the estimated 8.4% decline.
In the fixed income market, Japanese Government Bond (JGB) yields saw a notable retreat. The 30-year JGB yield fell 8.5 basis points to 4.015%, while the 10-year yield settled at 2.745%. This easing of yields suggests a recalibration of long-term inflation expectations as energy prices soften. Weekly security flow data showed that while foreign investors sold a net ¥1,033.4 billion in Japanese bonds, they remained net buyers of Japanese stocks, totaling ¥949.6 billion.
Geopolitical Friction and Corporate Outlooks
Despite the broader market optimism, diplomatic tensions between Washington and Beijing remain a point of concern. A Pentagon official’s planned visit to Beijing is reportedly in doubt following the announcement of a $14 billion US arms package for Taiwan. Additionally, investors are monitoring Washington as President Trump is scheduled to sign an executive order at 3:30 PM Thursday, following an earlier announcement with the EPA Administrator.
In the corporate sector, Singtel (Z74) issued a cautious near-term outlook despite having no direct operations in the Middle East. The telecommunications giant expects FY EBIT growth to land between low and mid-single digits. Meanwhile, Gold held steady near $4,540/ounce, supported by a weaker US Dollar and lower Treasury yields, though analysts at Citigroup warned that while de-escalation near the Strait of Hormuz could find a bottom for gold, prolonged stagflation fears could still drive demand.
Ed Liston is a senior contributing editor at TheStockMarketWatch.com. An active market watcher and investor, Ed guides an independent team of experienced analysts and writes for multiple stock trader publications.