Investors were holding back, waiting to see what came next
On a Wednesday in Tokyo, the Nikkei 225 rose modestly but meaningfully, carried by the quiet hope that a U.S.-Iran nuclear accord might ease the tensions that have long shadowed global markets. Falling oil prices and strong Japanese export figures offered their own reassurance, while investors held a collective breath ahead of the Federal Reserve's first policy statement under new Chairman Kevin Warsh. It was a day that reminded markets how much of their movement is not about what has happened, but about what might.
- The Nikkei stumbled at the open before recovering to close up 0.6% at 69,823.80, with the broader Topix rising 0.8% — a cautious but ultimately constructive session.
- Details of a U.S.-Iran interim deal began to surface, with nuclear restrictions and resumed oil sales on the table, draining some of the geopolitical risk premium that had weighed on global markets.
- Crude oil had already fallen roughly 5% in the prior session to three-month lows, easing inflation fears and lifting corporate profit expectations across equity markets.
- AI and semiconductor stocks led the charge — Lasertec surged 13.7% and Murata Manufacturing climbed 4.6% — while SoftBank and Nippon Yusen bucked the trend with notable losses.
- Japan's core machinery orders for April leapt 8.7% month-on-month against a forecast of just 0.9%, reinforcing the economy's underlying resilience even as investors awaited Fed Chair Warsh's first post-FOMC press conference.
Tokyo's markets opened Wednesday on uncertain footing, but the Nikkei 225 steadied through the session to close up 0.6% at 69,823.80, with the Topix gaining 0.8%. The mood was careful — investors were navigating two large uncertainties at once: a possible diplomatic breakthrough in the Middle East and an imminent signal from the U.S. Federal Reserve.
The contours of a U.S.-Iran interim agreement were coming into focus, with President Trump indicating the deal would block Tehran from developing nuclear weapons and a U.S. official noting that Iranian oil exports could resume once terms were finalized. Crude oil had already absorbed the news, falling around 5% in the prior session to three-month lows before partially recovering. For equity markets, cheaper oil is a quiet gift — it eases inflation and widens corporate margins.
Nomura Securities strategist Wataru Akiyama described the market's posture accurately: investors were holding back, waiting on the Fed, but the Middle East stabilization and oil decline were tilting conditions in stocks' favor. Market breadth confirmed it — 155 Nikkei stocks advanced against just 68 declines, a ratio suggesting broad participation rather than a narrow rally.
AI and semiconductor names led the gains. Lasertec surged 13.7% and Murata Manufacturing rose 4.6%, reflecting both sectoral momentum and the market's appetite for growth when geopolitical clouds thin. SoftBank Group and Nippon Yusen moved the other way, falling 3% and 2.5% respectively.
Underpinning the session was genuinely strong economic data. Japanese exports had risen for nine straight months through May, and April core machinery orders jumped 8.7% month-on-month — dwarfing the 0.9% median forecast. The Bank of Japan had raised rates to 1.00% the day before, briefly pushing the Nikkei above 70,000 for the first time. Now attention shifted to Washington, where Fed Chair Kevin Warsh was preparing his first post-FOMC press conference. With the Fed expected to hold rates steady, his words on inflation and the economic outlook would be parsed carefully — one more variable in a market already holding many threads at once.
Tokyo's stock market opened Wednesday in a careful mood. The Nikkei 225 had stumbled early in the session, but by day's end it had clawed back to a gain of 0.6%, closing at 69,823.80. The broader Topix index did slightly better, rising 0.8% to 4,024.25. The mood was cautious but constructive—investors were threading a needle between two major uncertainties: the possibility of a breakthrough in the Middle East and the looming decision from the U.S. Federal Reserve.
The Middle East situation had shifted noticeably. Details of a U.S.-Iran interim agreement were beginning to surface, with President Donald Trump stating the deal would prevent Tehran from developing nuclear weapons. A U.S. official added that Iran would be permitted to resume oil sales once the agreement was finalized. These developments had already rippled through commodity markets. Crude oil prices had fallen roughly 5% in the previous trading session, hitting three-month lows before recovering some ground on Wednesday. For equity investors, cheaper oil is often welcome news—it reduces inflation pressure and improves corporate profit margins across much of the economy.
Wataru Akiyama, an equities strategist at Nomura Securities, captured the market's temperament precisely. Investors were holding back somewhat, he explained, waiting to see what the Federal Reserve would do. But the stabilization in the Middle East and the resulting decline in oil prices were working in stocks' favor. The market breadth told the story: 155 stocks advanced while only 68 declined on the Nikkei, a healthy ratio that suggested broad-based buying rather than narrow leadership.
The stocks that have driven much of the Nikkei's recent strength—those tied to artificial intelligence and semiconductors—performed particularly well. Lasertec, which makes chip inspection equipment, surged 13.7%. Murata Manufacturing, a maker of electronic components, climbed 4.6%. These gains reflected both the sector's underlying momentum and the market's appetite for growth stories when geopolitical risk recedes. Not everything moved higher. SoftBank Group, the technology investor, fell 3%, while Nippon Yusen, a major shipping company, dropped 2.5%.
The backdrop for all this was solid economic data. Japan's exports had now risen for nine consecutive months in May. More striking was the jump in core machinery orders for April—up 8.7% month-on-month, far exceeding the median economist forecast of 0.9%. These figures suggested underlying strength in the Japanese economy, even as investors remained cautious about what came next.
That caution was entirely rational. The Bank of Japan had raised interest rates to 1.00% the previous day, as expected, and the Nikkei had briefly crossed the 70,000 mark for the first time. But now all eyes were on Washington. Kevin Warsh, the new chairman of the Federal Reserve, was about to hold his first press conference following an FOMC meeting. The Fed was widely expected to hold rates steady, but Warsh's comments on inflation, unemployment, and the economic outlook would carry weight. In a market already juggling multiple moving pieces—geopolitical risk, oil prices, interest rate expectations, and growth momentum—his words could shift the entire calculation.
Citas Notables
With tonight's Fed meeting approaching, investors are adopting a somewhat more wait-and-see stance. However, falling crude oil prices as the Middle East situation stabilizes serves as a positive factor for share prices.— Wataru Akiyama, equities strategist at Nomura Securities
La Conversación del Hearth Otra perspectiva de la historia
Why did the market hesitate this morning if the news seemed positive?
Because the Fed decision was hanging over everything. Investors didn't want to commit too heavily until they heard from Kevin Warsh. The Middle East news and oil prices were tailwinds, but they weren't enough to overcome the uncertainty.
So the Iran deal is actually happening?
The details are emerging, but it's not finalized yet. Trump said it prevents nuclear weapons, and officials say Iran can sell oil once it's signed. That's enough to move markets, but investors are still waiting for the formal announcement.
Why do falling oil prices help stocks so much?
Lower energy costs reduce inflation pressure and improve profit margins for most companies. It's like a tax cut for the economy. But it also signals that geopolitical risk is declining, which matters psychologically to investors.
The AI stocks jumped hard. Is that just sector momentum?
Partly, yes. But when geopolitical risk falls and growth looks stable, investors rotate into the stocks they think will drive future returns. AI and semiconductors are where that money goes right now.
What happens if Warsh signals the Fed might raise rates?
The market would likely sell off. Higher rates make future corporate earnings worth less in today's dollars, and they also compete with stocks for investor attention. That's why everyone's waiting to hear what he says.