On May 2, the Nikkei index on the Tokyo Stock Exchange extended its rally, jumping more than 5% from the previous session. This marks the strongest gain in months, fueled by mounting expectations that the conflict in the Middle East could soon conclude.
Investors globally, including those in Japan, reacted positively to new diplomatic signals suggesting parties involved are moving closer to a ceasefire agreement. This has eased concerns over energy supply disruptions and prolonged geopolitical instability.
The Nikkei's rally was broad-based, with stocks across export, technology, and financial sectors posting significant gains. Analysts noted a clear improvement in market sentiment as geopolitical risks eased, opening up prospects for a global economic recovery.
Earlier, the Nikkei had come under pressure for weeks due to escalating tensions in the Middle East. However, with the latest developments, markets are anticipating a more stable period, supporting a return of investment flows into risk assets.
