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Tokyo’s Markets Extend Record-Breaking Rally

Japan’s Nikkei 225 soared to an all-time high for the second straight session on Tuesday, climbing past 41,100 points as the global tech rally intensified. The gains were largely driven by optimism following Wall Street’s surge, powered by a massive 24% jump in AMD shares after the chipmaker revealed a strategic partnership with OpenAI.

The Nikkei’s rise, which added over 0.9% by midday trading, underscores growing investor confidence in Japan’s semiconductor and AI sectors — industries that continue to benefit from the global AI investment wave.

Chip Stocks Lead the Charge

Technology shares dominated the Tokyo market. Advantest surged 4.3%, Tokyo Electron gained 2.1%, and Renesas Electronics advanced nearly 4.9%, reflecting the ripple effect from AMD’s announcement. Lasertec also climbed 1.4%, continuing its strong performance from Monday.

Investors have been pouring into Japan’s chipmakers, betting on long-term demand for AI infrastructure and semiconductor innovation. The sector now makes up more than 35% of the Nikkei’s total market capitalization, highlighting its growing dominance in Japan’s stock landscape.

Political Stability Adds to Market Momentum

The rally follows a strong start to the week after the ruling Liberal Democratic Party’s weekend decision to elect Sanae Takaichi as its new leader — setting the stage for Japan’s first-ever female prime minister. Market analysts say the leadership change is being viewed as a sign of potential policy stability and continuity, especially regarding economic reform and innovation funding.

Rising Bond Yields and Yen Weakness

While equities rallied, Japan’s government bond yields climbed sharply. The 10-year JGB yield rose by two basis points to 1.694%, marking its highest level since mid-2008. The 20-year and 30-year bonds also surged to 2.734% and 3.333%, respectively — their highest levels in over two decades.

The Japanese yen, meanwhile, weakened for the fourth consecutive session, slipping 0.11% to 150.49 against the U.S. dollar. The currency’s sustained depreciation, down nearly 2% in just 24 hours, continues to support export-heavy Japanese firms, adding another tailwind to the stock market.

Mixed Moves Across the Asia-Pacific Region

Elsewhere in the region, Australia’s S&P/ASX 200 slipped 0.27%, extending its losses from Monday, as investors reacted cautiously to rising U.S. bond yields. Chinese, Hong Kong, and South Korean markets remained closed for national holidays, leading to thinner regional trading volumes.

Wall Street Strength Fuels Asian Optimism

The overnight U.S. rally set the tone for Asian markets. The S&P 500 closed up 0.36% at a new record high — its 32nd of the year — while the Nasdaq gained 0.71%, finishing at 22,941.67. The Dow Jones Industrial Average dipped slightly by 63 points, dragged down by weakness in Sherwin-Williams and Home Depot stocks.

The spotlight, however, was firmly on AMD, whose market value jumped by nearly $60 billion following reports that OpenAI plans to acquire a 10% stake. The news reignited enthusiasm for semiconductor and AI-linked stocks, boosting investor confidence across both Wall Street and Asian exchanges.

Outlook: AI Boom Keeps Investors Bullish

With chipmakers leading global markets and Japan’s economic outlook brightening under new leadership, investors appear increasingly confident that the Nikkei’s record run could continue. Analysts at several Tokyo-based brokerages predict the index could test 42,000 before year-end, provided global demand for semiconductors remains strong and the yen continues to stay weak.

The combination of political clarity, rising AI optimism, and resilient tech performance suggests that Japan — long overshadowed by the U.S. and China in market headlines — may once again be stepping into the global spotlight as an investment powerhouse.