{"id":62561,"date":"2026-05-31T20:38:22","date_gmt":"2026-06-01T00:38:22","guid":{"rendered":"https:\/\/www2.stockmarketwatch.com\/stock-market-news\/nikkei-and-kospi-hit-record-highs-amid-surge-in-japanese-corporate-profits-capex-stalls-on-geopolitical-uncertainty\/62561\/"},"modified":"2026-05-31T20:38:22","modified_gmt":"2026-06-01T00:38:22","slug":"nikkei-and-kospi-hit-record-highs-amid-surge-in-japanese-corporate-profits-capex-stalls-on-geopolitical-uncertainty","status":"publish","type":"post","link":"https:\/\/www2.stockmarketwatch.com\/stock-market-news\/nikkei-and-kospi-hit-record-highs-amid-surge-in-japanese-corporate-profits-capex-stalls-on-geopolitical-uncertainty\/62561\/","title":{"rendered":"Nikkei and KOSPI Hit Record Highs Amid Surge in Japanese Corporate Profits; CapEx Stalls on Geopolitical Uncertainty"},"content":{"rendered":"<h2>Key Takeaways<\/h2>\n<ul>\n<li><strong>Nikkei 225 and KOSPI reach new record highs<\/strong> as investor appetite for technology and semiconductor shares offsets persistent geopolitical tensions in the Middle East.<\/li>\n<li><strong>Japanese corporate profits surged 14.6% Y\/Y in Q1<\/strong>, crushing analyst estimates of <strong>5.3%<\/strong>, though capital spending remained stagnant at <strong>0.0%<\/strong> due to regional uncertainty.<\/li>\n<li><strong>US-Iran peace negotiations remain deadlocked<\/strong> as President Trump demands stricter nuclear guarantees while Tehran expresses deep distrust of Washington\u2019s latest proposals.<\/li>\n<li><strong>Australia\u2019s manufacturing sector showed resilience<\/strong> with the S&amp;P Global PMI for May revised upward to <strong>50.7<\/strong>, indicating continued expansion despite global headwinds.<\/li>\n<\/ul>\n<h2>Asian Markets Reach New Milestones<\/h2>\n<p>Asia-Pacific equity markets began the new month on a strong note, with the Nikkei 225 (<a href=\"\/stock\/NI225\">NI225<\/a>) and South Korea\u2019s KOSPI (<a href=\"\/stock\/KOSPI\">KOSPI<\/a>) both extending their rallies to reach <strong>fresh record highs<\/strong>. The Nikkei rose <strong>0.5%<\/strong>, while the KOSPI gained <strong>1.2%<\/strong>, fueled by a continued surge in AI-related semiconductor demand. Leading the charge were tech heavyweights such as Samsung Electronics (<a href=\"\/stock\/005930\">005930<\/a>) and SK Hynix (<a href=\"\/stock\/000660\">000660<\/a>), which benefited from robust earnings expectations for high-bandwidth memory chips.<\/p>\n<p>In contrast, Australia\u2019s ASX 200 (<a href=\"\/stock\/XJO\">XJO<\/a>) dipped <strong>0.2%<\/strong>, even as domestic data showed the S&amp;P Global Manufacturing PMI rising to <strong>50.7<\/strong> in May, up from a preliminary estimate of <strong>50.2<\/strong>. <em>Market sentiment remains bifurcated as investors weigh strong corporate performance against the lack of a definitive resolution to the conflict in the Middle East.<\/em><\/p>\n<h2>Japan\u2019s Corporate Divergence: Profits vs. Investment<\/h2>\n<p>Fresh data from Japan\u2019s Ministry of Finance revealed a stark contrast between corporate earnings and business investment. Japanese company profits jumped <strong>14.6% Y\/Y<\/strong> in the first quarter, significantly higher than the <strong>5.3%<\/strong> forecast and the previous quarter&#39;s <strong>4.7%<\/strong>. Sales also showed improvement, growing <strong>1.1% Y\/Y<\/strong> compared to <strong>0.7%<\/strong> previously.<\/p>\n<p>However, Japanese capital spending (CapEx) was flat at <strong>0.0% Y\/Y<\/strong>, missing the <strong>4.0%<\/strong> growth expected by economists. When excluding software, capital spending actually contracted by <strong>1.4%<\/strong>, a sharp reversal from the <strong>7.3%<\/strong> growth seen in the prior period. <em>Analysts suggest that while companies are highly profitable, escalating turbulence in the Middle East has caused corporate sentiment to sag, leading firms to delay major investments in plant and equipment.<\/em><\/p>\n<h2>Geopolitical Deadlock and Economic Fallout<\/h2>\n<p>The diplomatic path to a US-Iran peace deal remains elusive as both sides exchange &quot;tougher&quot; framework proposals. US President Donald Trump stated that any agreement must clearly stipulate that Iran will <strong>never possess a nuclear weapon<\/strong>, claiming he has secured verbal guarantees to that effect. However, Iranian officials, including Parliament Speaker Mohammad Bagher Ghalibaf, have warned that they <strong>&quot;neither trust the enemy&#39;s words nor its promises,&quot;<\/strong> insisting on the release of <strong>$12 billion<\/strong> in frozen assets before substantive talks continue.<\/p>\n<p>Within Iran, the economic impact of the conflict and the associated US maritime blockade is intensifying. Hamed Yazdian, head of the Iranian parliament\u2019s agriculture committee, noted that <strong>80% of recent price hikes<\/strong> for essential goods are due to the removal of subsidized foreign currency, while only <strong>20%<\/strong> can be attributed directly to the war or mismanagement. <em>The ongoing blockade of the Strait of Hormuz continues to choke international oil supplies, keeping Brent crude prices elevated near $93 a barrel.<\/em><\/p>\n<h2>Manufacturing Resilience in Australia<\/h2>\n<p>Australia\u2019s manufacturing sector provided a bright spot in the regional data, with the final May PMI reading of <strong>50.7<\/strong> beating expectations. This expansion has tempered bets for a near-term interest rate cut by the Reserve Bank of Australia, as the economy shows more underlying strength than previously assumed. <em>The resilience in manufacturing, combined with recovering iron ore prices, has provided a solid floor for the Australian Dollar and supported cyclical stocks in the materials and industrial sectors.<\/em><\/p>\n","protected":false},"excerpt":{"rendered":"<p>Key Takeaways Nikkei 225 and KOSPI reach new record highs as investor appetite for technology and semiconductor shares offsets persistent 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