Japan's Nikkei rises over 1% on Wall Street gains

Japan's Nikkei share average rose more than 1% on Tuesday, reaching its highest level in nearly three weeks. This increase followed gains in U.S. markets and was largely driven by strong performances from trading firms. The Nikkei crossed the 38,000 mark for the first time since late February, hitting 38,004.2 at one point. However, by the end of the morning session, it settled at 37,943.23, up 1.43% from the previous day. The broader Topix index also increased, rising 1.44% to 2,787.78. Investors expressed some relief due to positive trends, including U.S. market gains and a rally in domestic trading houses. Yusuke Sakai, a senior trader at T&D Asset Management, noted that while there were positive signals, concerns over U.S. tariff policies continued to weigh on sentiment. In the U.S., stocks gained for a second consecutive session, as investors looked for bargains after recent declines. They were also assessing economic data linked to policies from the Trump administration. In Japan, trading firms saw significant jumps. Mitsui & Co climbed by 4.32%, and Mitsubishi Corp increased by 4.27% after Warren Buffett's Berkshire Hathaway boosted its stake in five Japanese trading houses. Other notable gains included Uniqlo's parent company Fast Retailing, which rose by 1.54%, and chip-testing equipment maker Advantest, which increased by 3.18%. Despite the Nikkei's rise, analysts indicated that investor confidence remained cautious. Shuutarou Yasuda, of Tokai Tokyo Intelligence Laboratory, explained that while some worries about the U.S. tariffs had eased, investors were not yet optimistic. This cautious sentiment led to stock selling as the index approached the 38,000 level. Meanwhile, shares in the defense sector, which had previously seen gains, fell. IHI dropped by 3.72% and Mitsubishi Heavy Industries by 2.2% as investors recalibrated their expectations on defense spending.