The Nikkei index at the Tokyo Stock Exchange rose more than 4% during Friday's trading session (July 25), marking its strongest gain in months. The rally was fueled by better-than-expected earnings from major Japanese companies, easing prior worries about a potential downturn in artificial intelligence (AI) investment.
The main driver of the market's sharp recovery was a wave of large technology and manufacturing conglomerates posting stronger-than-projected second-quarter profits. Investors viewed these results as a sign that demand for semiconductors, data centers, and AI-related products remains robust, despite earlier speculation that spending on such technology could contract.
Analysts said the strong session reflects a return of investor optimism after an extended period of caution. Upbeat growth forecasts from major listed companies also reinforced confidence in Japan's macroeconomic outlook, particularly with the yen still relatively weak, which supports export activity.
However, experts cautioned that markets may continue to see significant volatility in the near term, as investors closely monitor U.S. inflation trends and monetary policy decisions from major central banks.
