Japan’s Nikkei 225 Blows Past 65,000 After Trump Lifts Hopes of Hormuz Reopening

Asian economy is a bit too dependent on the key waterway, which is why the reaction was a bit overexcited.

🏆 Nikkei Charts the Uncharted

• Nikkei 225 smashed through the 65,000 mark for the first time Monday, rallying more than 3% in thin holiday trading as investors suddenly decided the global economy may not, in fact, be heading straight into an oil-fueled panic spiral.
• The benchmark index touched a record 65,409, while the broader Topix climbed 1.2%. With markets in Hong Kong and South Korea closed for holidays — and US markets offline for Memorial Day — price swings looked a little extra.
• Japan’s reaction may have seemed a bit over-the-top, but there’s logic behind it. The country imports the overwhelming majority of its energy, and a huge chunk flows through the Strait of Hormuz. So when oil risks ease, Japanese stocks tend to get a solid bid.

🛢️ Oil Tanks, Stocks Cheer

• Investor optimism kicked in after Donald Trump said negotiations with Iran were progressing in an “orderly and constructive manner.” He added that US representatives were told “not to rush into a deal,” hinting tensions may finally be cooling.
• Oil traders immediately hit the sell button. Crude prices plunged more than 5% after Trump’s comments, reversing part of the explosive rally triggered by the blockade on Iranian ports and the effective closure of the Strait of Hormuz earlier this year.
• The Strait is one of the world’s most important energy chokepoints. Roughly a fifth of global oil supply passes through it.

✨ Gold Can Shine Again

• Even with stocks surging and oil cooling off, investors didn’t completely abandon safety trades. Gold prices edged higher above $4,560 early Monday, adding roughly 1% as traders continued hedging against prospects of lower interest rates in the US.
• The mixed market behavior says a lot about current sentiment. Investors are more optimistic than they were a week ago (or eight weeks ago), but nobody’s exactly declaring an end of the war. One Truth Social post, apparently, can move oil 5%, stocks 3% and blood pressure 20%.
• Still, Japan’s market is enjoying the moment. Lower oil prices ease inflation pressure, reduce import costs and improve the outlook for corporate profits. In Tokyo this morning, the prospect of reopening one narrow waterway suddenly felt worth several trillion yen.