While the Middle East conflict reduced the volume of oil flowing through the Strait of Hormuz, the resulting surge in energy costs and pivot toward alternative procurement channels likely drove up Japan's import bill.
Japan exports in May grow at fastest pace in more than three years, beating estimates
Its shares surged, underscoring strong investor appetite for new listings amid a sustained rally in domestic equities.
Japan's central bank lifted its policy rate to 1%, anchoring its policy path against the inflationary risks of a war-induced spike in energy costs.
Japan's three largest banks said on Wednesday they will jointly issue stablecoins during the current fiscal year ending in March 2027, a sign of growing momentum for digital payments in a country where cash and credit cards remain popular.
Despite recent foreign-exchange intervention, the Japanese currency has weakened again to near the 160 threshold against the dollar, a level seen as a potential trigger for more government action.
Asian equities fell on Tuesday as doubts over a Middle East ceasefire weighed on risk appetite, offsetting optimism around artificial intelligence funding and potential listings. MSCI's Asia-Pacific index excluding Japan slipped 0.6% after a volatile open.
Japan stock have already had a record run, and one of the largest Wall Street banks believes their rally is far from over yet. Goldman Sachs strategists have raised their 12-month target for the benchmark Topix index to 4,400, indicating potential upside of more than 10% from current levels.
Japanese banks are, in a historic shift, competing to shore up their deposit base as lending opportunities grow and consumers, seeking to beat inflation, shift their savings into a booming stock market.
Foreign investors continued buying Japanese equities for an eighth consecutive week through May 23, supported by easing oil prices and growing optimism around artificial intelligence-related shares. According to data released by Japan's Ministry of Finance on Thursday, foreign investors purchased a net 1.08 trillion yen ($6.77 billion) worth of Japanese stocks during the week ended May 23.
Japan's Nikkei 225 climbed to a record high on Wednesday, as a rally in semiconductor shares outweighed weakness in banks and real estate stocks. The benchmark index rose 1.25% to 65,811.78 as of 0147 GMT, after touching an intraday high of 66,428.81.
Japan is set to begin talks with South American trade bloc Mercosur on an economic partnership to seek alternative oil sources, critical minerals and lower auto tariffs, the Nikkei newspaper reported on Tuesday.