TOKYO (AP) — Japanese stocks briefly crossed a historic milestone Tuesday as the Nikkei 225 surpassed 70,000 for the first time ever, before retreating from those highs following an interest rate increase by the Bank of Japan. The central bank lifted its key rate to 1%, marking the highest benchmark level seen in Japan in roughly 30 years.
The quarter-point increase trimmed some of the early enthusiasm in the market. By early afternoon, the Nikkei 225 had settled to a gain of 0.6%, sitting at 69,713.05.
Elsewhere in Asia, South Korea’s Kospi continued its record-breaking run, climbing 2.1% to 8,721.64. China’s Shanghai Composite edged up less than 0.1% to 4,100.53. Australia’s S&P/ASX 200 dipped 0.3% to 8,892.10, and Hong Kong’s Hang Seng fell 1.3% to 24,533.35. Taiwan’s Taiex rose 0.6%, while India’s Sensex added 0.5%.
The broader positive mood in markets followed a strong Monday session on Wall Street, where stocks surged globally after the United States and Iran reached a tentative agreement aimed at restoring the flow of crude oil. The S&P 500 jumped 1.7%, the Dow Jones Industrial Average climbed 0.9% to a record high, and the Nasdaq composite soared 3.1%.
Oil prices dropped sharply on expectations that the deal could lead to the reopening of the Strait of Hormuz, a critical waterway through which much of Asia receives its oil. Brent crude fell 4.8%. However, some analysts cautioned that significant uncertainties remain. Negotiations between the two countries are expected to continue over the next 60 days, and even after the Strait of Hormuz reopens as anticipated on Friday, energy markets could take months to return to full capacity.
Oil prices had already been declining in recent weeks on hopes for a ceasefire extension in the ongoing war, dropping from levels above $100 per barrel. Prior to the war, oil had been trading around $70 a barrel.
As of early Tuesday, U.S. benchmark crude was down 9 cents at $80.66 a barrel, while Brent crude, the international standard, fell 24 cents to $82.93 a barrel.
On Monday, stocks tied to the artificial intelligence sector posted impressive gains. Micron Technology surged 10.8% and Advanced Micro Devices climbed 7%. Nvidia rose 3.5%, providing the single biggest lift to the S&P 500 due to its status as Wall Street’s most valuable company, giving it more influence over the index than any other stock. SpaceX, the rocket company owned by Elon Musk that also holds the AI firm xAI, jumped 19.6% in its second day of trading on public markets.
In the bond market, Treasury yields eased slightly as investors hoped lower oil prices would reduce pressure on central banks to raise rates further. The yield on the 10-year Treasury note slipped to 4.47% from 4.48% at the close on Friday.
In currency markets early Tuesday, the U.S. dollar was nearly flat against the Japanese yen at 160.33. The euro traded at $1.1580, a slight decline from $1.1592.
