On August 18, 2025, Japan’s Nikkei 225 surged to a record high of 43,683.56, gaining 0.7 %, while the broader Topix index advanced 0.58 % to 3,125.6. The rally was largely powered by a weaker yen, which boosted exporters’ outlooks, and by strong performances from automakers such as Toyota Motor, which rose 1.58 %, and Honda Motor, which gained 1.22 %. The yen fell 0.2 % against the U.S. dollar, making Japanese exports more competitive, a development that directly benefited the Nikkei’s heavyweights, according to Reuters and the Economic Times.

Investor optimism has also been reinforced by expectations of sustained foreign buying in Japanese equities. The market continued to build momentum from last week amid a bullish outlook. Fast Retailing, the operator of Uniqlo, added further strength with a 1.2 % jump, making it another major contributor to Nikkei’s rise, reported Reuters.

Yet, the rally was not uniform across all sectors. Japan’s banking sub-index dropped 1.45 %, with Mitsubishi UFJ Financial down 1.96 % and Sumitomo Mitsui Financial falling 1.78 %, as highlighted by Reuters. Chip-related shares also lagged, with Tokyo Electron sliding 1.3 % and Advantest down 0.09 %, according to the Economic Times.

The performance of Japanese markets also mirrors broader global trends. The Dow Jones Industrial Average has been climbing toward record highs, with a notable boost from UnitedHealth shares after Berkshire Hathaway raised its stake, as reported by Reuters. That momentum spread across Asian equities, lifting investor confidence in Tokyo.

The latest rally builds on earlier milestones. On August 12, 2025, the Nikkei had already closed at 42,849.67, a 2.46 % gain, driven by surges in SoftBank Group—up 6.9 % amid speculation it could list its payments arm PayPay in the U.S.—and by strong semiconductor stocks such as Advantest and Lasertec. That session also saw a broader lift across Asia following a 90-day extension of the U.S.–China trade truce, which fueled optimism region-wide, according to Reuters and the Times of India.

Still, analysts remain cautious. In their assessment of the August 12 rally, Reuters reported that while a weaker yen, easing trade tensions, and upbeat corporate earnings have underpinned Japanese equities, seasonal factors such as the Obon holiday lull and the absence of new catalysts could test the sustainability of the surge.