Japan’s Nikkei share average ended higher on Monday as investors largely ignored US President Donald Trump’s latest threat to attack Iranian infrastructure. The market instead focused on signs that the Middle East conflict could de-escalate. The Nikkei rose 0.55 percent to 53,413.68 by the closing bell. The broader Topix erased early gains to close just 0.01 percent lower at 3,644.8.
Trump warned on Sunday that the US could target Iran’s power plants and bridges as early as Tuesday. He made this threat conditional on the strategic Strait of Hormuz remaining closed. Trump’s repeated threats to destroy civilian infrastructure have put global traders on edge. Many fear reciprocal attacks by Iran on targets in Gulf states. However, Trump also suggested a diplomatic breakthrough may be coming soon. He said a deal with Iran could be reached as early as Monday. Negotiations with Iran were already underway, according to a Fox News report. The market shrugs off these threats as investors look past the rhetoric toward potential peace talks.
Takamasa Ikeda, senior portfolio manager at GCI Asset Management, offered his perspective. Trump has become like the boy who cried wolf, Ikeda stated. If he were really willing to attack Iran’s facilities, he would have done it already. The market started eyeing the withdrawal of the United States instead. Investors also focused on post-war negotiations between allied nations without the US. The Nikkei has rallied for three consecutive sessions as a result.
Kazuaki Shimada, chief strategist at IwaiCosmo Securities, provided additional analysis. Investors started selling stocks once the Nikkei hit the psychologically important level of 54,000. The Nikkei has more resistance to rising oil prices now. The market started shifting its focus to growth in artificial intelligence-related stocks. Chip-testing equipment maker Advantest rose 1.74 percent on Monday. Technology investor SoftBank Group also gained 1.08 percent during trading. The shipping sector rose 1.55 percent to become the top performer. This sector led all 33 industry sub-indexes on the Tokyo Stock Exchange.
Of the more than 1,600 stocks trading on the TSE’s prime market, 60 percent rose on Monday. Only 35 percent fell during the trading session, while 4 percent traded flat. Looking ahead, investors will monitor Middle East developments closely. Any actual military strike could reverse the current market optimism. However, expectations of a diplomatic solution continue to support share prices. Japanese exporters benefit from a stable geopolitical environment. Technology stocks remain attractive due to AI growth prospects. The market shrugs off repeated threats because tangible action has not followed the rhetoric. Investors have heard similar warnings before without consequences.
