Nikkei tops 69,700 after US‑Iran deal; BOJ hike ahead
Nikkei hit an intraday high of 69,705 after a US‑Iran agreement ended a naval blockade; the BOJ is widely expected to raise its policy rate from 0.75% to 1% on Tuesday.
Tokyo stocks rose sharply on Monday as the Nikkei moved past 69,700 to an intraday high of 69,705. The benchmark added roughly $465 billion in market value, about 77.22 trillion yen, and stood at 69,234 at the time of reporting.
The rally followed an announcement by President Donald Trump of an agreement with Iran that ends a US naval blockade and reopens the Strait of Hormuz. The agreement is scheduled to be signed in Switzerland on Friday. Crude oil prices fell on the news, with West Texas Intermediate down about 4.6% and Brent roughly 5% lower. US equity futures rose, with Dow futures up about 342 points, S&P 500 contracts up about 0.9% and Nasdaq 100 futures up about 1.4%. In Asia, South Korea’s KOSPI gained 5.46% and Japan’s Topix rose 3.3%. Total cryptocurrency market capitalization was up nearly 2% as Bitcoin approached $66,000.
Market attention in Japan is focused on the Bank of Japan’s policy decision scheduled for Tuesday. The BOJ is widely expected to raise its policy rate to 1% from 0.75%. A survey of 51 economists found 49 forecast a hike, and market-implied probability measures were above 90%. A separate poll of economists indicated another increase to 1.25% is expected in the fourth quarter.
Higher Japanese interest rates affect yen‑funded carry trades. In these strategies, investors borrow in yen and invest the proceeds in higher‑yielding assets overseas. As borrowing costs in Japan rise, the yield advantage on those positions narrows, which reduces profitability and can lead some investors to cut leverage and repatriate capital to Japan.
Since 2024, Japan has recorded four market selloffs linked to shifts in BOJ policy. Market participants cite those episodes when assessing how forthcoming policy changes and the BOJ’s guidance might influence volatility in equities, bonds and digital assets.
Two near‑term events could influence capital flows and risk appetite: the BOJ’s rate announcement and accompanying guidance on Tuesday, and the formal signing of the US‑Iran agreement in Switzerland on Friday.
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