Japan's Trade Balance Swung to Deficit Driven by Higher Energy Costs

Japan's indexes erased morning gains following the release of international trade data. 

The Nikkei 225 Stock Average increased 0.1%, the broader TOPIX advanced 0.6%, and the Japanese yen weakened to a new 40-year low of 163.06 against the U.S. dollar. 

In early trading benchmark indexes jumped as much as 0.9%, and they lost momentum after Japan's trade balance swung to a larger-than-expected deficit in June. 

Japan's Trade Balance Swung to Deficit in June

Japan's exports rose to a three-month high 10.9 trillion yen in June, an increase of 19.3% from a year ago, according to the Ministry of Finance. 

The weakness in the yen and robust demand for AI-related semiconductors and data center equipment overcame the supply disruptions from the U.S. and Israel's war with Iran. 

Shipments of semiconductor equipment soared 53.8% from a year ago. Exports to Asia gained 22.7%; direct sales to the U.S. advanced 13.0%; and exports to China increased 17.6%. 

Late-2025 government stimulus boosted domestic demand in June, and imports from China increased by 29.4%, Taiwan by 49.1%, South Korea by 32.2%, the U.S. by 52.7%, and the ASEAN region by 25.5%.   

Crude oil imports soared 59.3% as Japan diversified energy procurement away from the Strait of Hormuz amid ongoing regional tensions. 

Japan's trade balance swung to a deficit of 406.9 billion yen in June from a surplus of 122.3 billion yen in the same month a year earlier. 

For the first six months, exports increased 13.7% to 60.7 trillion yen on robust shipments of vehicles to the European Union and semiconductors and other electronic devices, mainly to China. 

Japan's imports advanced 25.4% to 11.4 trillion yen, marking the fifth consecutive month of increase and the strongest expansion since November 2022. 

Crude oil imports in the first six months of 2026 declined 26.4% to 47.31 million kiloliters, according to the preliminary report by the Ministry of Finance. 

Japan's international trade deficit of 1.01 trillion yen, or $6.2 billion, in the first six months to June, with the Middle East crisis and supply disruptions in the Strait of Hormuz affecting imports. 

Japan Indexes and Stocks 

The Nikkei 225 Stock Average decreased 0.13% to 66,149.11, and the broader TOPIX advanced 0.6% to 4,038.46. 

Semiconductor- and AI-related stocks led gainers in Tokyo. 

Kioxia Holdings increased 5.3% to ¥64,270.0; Murata Manufacturing Co. Ltd. advanced 3.6% to ¥8,317.0; Tokyo Electron weakened 0.9% to ¥65,960.0, and Advantest Corp. fell 0.2% to ¥29,585.0. 

Nippon Yusen KK increased 1.3% to ¥5,818.0, Kawasaki Kisen Kaisha Ltd. gained 0.5% to ¥2,764.0, and Mitsui O.S.K. Lines jumped 2% to ¥5,783.0. 

Japan's Trade Balance Swung to Deficit Driven by Higher Energy Costs

Japan's indexes erased morning gains following the release of international trade data. 

The Nikkei 225 Stock Average increased 0.1%, the broader TOPIX advanced 0.6%, and the Japanese yen weakened to a new 40-year low of 163.06 against the U.S. dollar. 

In early trading benchmark indexes jumped as much as 0.9%, and they lost momentum after Japan's trade balance swung to a larger-than-expected deficit in June. 

Japan's Trade Balance Swung to Deficit in June

Japan's exports rose to a three-month high 10.9 trillion yen in June, an increase of 19.3% from a year ago, according to the Ministry of Finance. 

The weakness in the yen and robust demand for AI-related semiconductors and data center equipment overcame the supply disruptions from the U.S. and Israel's war with Iran. 

Shipments of semiconductor equipment soared 53.8% from a year ago. Exports to Asia gained 22.7%; direct sales to the U.S. advanced 13.0%; and exports to China increased 17.6%. 

Late-2025 government stimulus boosted domestic demand in June, and imports from China increased by 29.4%, Taiwan by 49.1%, South Korea by 32.2%, the U.S. by 52.7%, and the ASEAN region by 25.5%.   

Crude oil imports soared 59.3% as Japan diversified energy procurement away from the Strait of Hormuz amid ongoing regional tensions. 

Japan's trade balance swung to a deficit of 406.9 billion yen in June from a surplus of 122.3 billion yen in the same month a year earlier. 

For the first six months, exports increased 13.7% to 60.7 trillion yen on robust shipments of vehicles to the European Union and semiconductors and other electronic devices, mainly to China. 

Japan's imports advanced 25.4% to 11.4 trillion yen, marking the fifth consecutive month of increase and the strongest expansion since November 2022. 

Crude oil imports in the first six months of 2026 declined 26.4% to 47.31 million kiloliters, according to the preliminary report by the Ministry of Finance. 

Japan's international trade deficit of 1.01 trillion yen, or $6.2 billion, in the first six months to June, with the Middle East crisis and supply disruptions in the Strait of Hormuz affecting imports. 

Japan Indexes and Stocks 

The Nikkei 225 Stock Average decreased 0.13% to 66,149.11, and the broader TOPIX advanced 0.6% to 4,038.46. 

Semiconductor- and AI-related stocks led gainers in Tokyo. 

Kioxia Holdings increased 5.3% to ¥64,270.0; Murata Manufacturing Co. Ltd. advanced 3.6% to ¥8,317.0; Tokyo Electron weakened 0.9% to ¥65,960.0, and Advantest Corp. fell 0.2% to ¥29,585.0. 

Nippon Yusen KK increased 1.3% to ¥5,818.0, Kawasaki Kisen Kaisha Ltd. gained 0.5% to ¥2,764.0, and Mitsui O.S.K. Lines jumped 2% to ¥5,783.0. 

Positive Second Quarter Earnings Support Upward Bias On Wall Street

U.S. investors remained sharply focused on corporate quarterly updates and overlooked escalating tensions in the Middle East. 

The S&P 500 Index increased 0.6%, and the tech-focused Nasdaq Composite advanced 1.4% as investors reviewed the fresh batch of earnings. 

General Motors, 3M, and Novartis advanced after releasing their quarterly updates, and investors awaited the release of updates from IBM, Alphabet, and Tesla later in the week. 

So far, about 65 large-cap companies have better-than-expected quarterly results, and investors are still holding out for at least 20% earnings in the growth in the June quarter. 

Investors are closely watching signs for the earnings outlook for the second half as resurgent inflation worries are dampening market sentiment. 

The West Texas Intermediate crude oil price increased 1.2% to $83.45 a barrel, and the international Brent crude oil price edged up 1.5% to $90.40 as the U.S. and Iran continued their air strike campaigns. 

Houthi rebels vowed to block Saudi Arabian commercial shipments through the Red Sea, adding to market anxieties and prolonging the disruption of energy product shipments from the Middle East. 

U.S. Movers 

General Motors increased 1.8% to $77.19 after the vehicle maker reported better-than-expected results in the second quarter. 

Revenue increased 1.9% to $48 billion from $47.1 billion, net income attributable to shareholders decreased 31% to $1.3 billion from $1.9 billion, and diluted earnings per share declined 26% to $1.41 from $1.91 a year ago. 

The company revised its adjusted earnings per share estimate for 2026 to between $12.0 and $14.0 from the previous range between $11.50 and $13.50. 

3M Company jumped 6% to $168.21 after the diversified industrial company reported better-than-expected second quarter results and lifted its full-year earnings guidance. 

Revenue increased 2.4% to $6.5 billion, diluted earnings per share rose 33% to $1.78 from $1.34, cash flow from operations was $1.0 billion, and the company returned $1.4 billion via dividends and stock repurchases.   

The company revised its full-year 2026 guidance and raised its total sales growth estimate to at least 4.5%, and adjusted the earnings per share range between $8.80 and $8.95.   

Novartis AG increased 3.1% to $154.26 after the Swiss pharmaceutical company's second quarter core earnings and revenue surpassed market expectations. 

Novartis reported revenue of $144.41 billion and core earnings of $2.41, both surpassing market expectations. 

The company said it is on track to achieve its full-year and mid-term estimates. 

Positive Second Quarter Earnings Support Upward Bias On Wall Street

U.S. investors remained sharply focused on corporate quarterly updates and overlooked escalating tensions in the Middle East. 

The S&P 500 Index increased 0.6%, and the tech-focused Nasdaq Composite advanced 1.4% as investors reviewed the fresh batch of earnings. 

General Motors, 3M, and Novartis advanced after releasing their quarterly updates, and investors awaited the release of updates from IBM, Alphabet, and Tesla later in the week. 

So far, about 65 large-cap companies have better-than-expected quarterly results, and investors are still holding out for at least 20% earnings in the growth in the June quarter. 

Investors are closely watching signs for the earnings outlook for the second half as resurgent inflation worries are dampening market sentiment. 

The West Texas Intermediate crude oil price increased 1.2% to $83.45 a barrel, and the international Brent crude oil price edged up 1.5% to $90.40 as the U.S. and Iran continued their air strike campaigns. 

Houthi rebels vowed to block Saudi Arabian commercial shipments through the Red Sea, adding to market anxieties and prolonging the disruption of energy product shipments from the Middle East. 

U.S. Movers 

General Motors increased 1.8% to $77.19 after the vehicle maker reported better-than-expected results in the second quarter. 

Revenue increased 1.9% to $48 billion from $47.1 billion, net income attributable to shareholders decreased 31% to $1.3 billion from $1.9 billion, and diluted earnings per share declined 26% to $1.41 from $1.91 a year ago. 

The company revised its adjusted earnings per share estimate for 2026 to between $12.0 and $14.0 from the previous range between $11.50 and $13.50. 

3M Company jumped 6% to $168.21 after the diversified industrial company reported better-than-expected second quarter results and lifted its full-year earnings guidance. 

Revenue increased 2.4% to $6.5 billion, diluted earnings per share rose 33% to $1.78 from $1.34, cash flow from operations was $1.0 billion, and the company returned $1.4 billion via dividends and stock repurchases.   

The company revised its full-year 2026 guidance and raised its total sales growth estimate to at least 4.5%, and adjusted the earnings per share range between $8.80 and $8.95.   

Japan's Nikkei 225 Closed up 3% Driven by a Rally in AI and Semiconductor Stocks

Japan's indexes rebounded sharply as investors returned from a three-day weekend, tracking gains in computer chipmakers in overnight trading in New York. 

The Nikkei 225 Stock Average gained nearly 3%, the broader TOPIX advanced more than 2%, and the yen hovered at 163.28 against the U.S. dollar. 

Benchmark indexes in Tokyo rebounded from the following 8% loss in the previous week; however, investor sentiment remained muted amid escalating tensions in the Middle East. 

The yen retained a downward bias, and traders prepared for the embattled currency to sink below the 167 level against the U.S. dollar before the year's end. 

The Brent crude oil price stayed at a five-week high of $88.57 a barrel, supported by escalating tensions in the Middle East and further disruption of energy shipments through the Strait of Hormuz. 

Japan Indexes and Stocks 

The Nikkei 225 stock average jumped 2.8% to 65,923.13, and the broader TOPIX increased 2.1% to 4,002.74. 

Kioxia Holdings increased 15% to ¥59,930.0, Tokyo Electron advanced 1.2% to ¥65,880.0, Taiyo Yuden gained 5.4% to ¥11,635.0, and Ibiden Co. jumped 8.5% to ¥17,025.0. 

Nippon Yusen KK jumped .02% to ¥5,717.0, Mitsui OSK Lines gained 0.8% to ¥5,655.0, and Kawasaki Kisen Kaisha Ltd. inched higher 0.6% to ¥2,741.0. 

Japan's Nikkei 225 Closed Up 3% Driven by a Rally In AI and Semiconductor Stocks

Japan's indexes rebounded sharply as investors returned from a three-day weekend, tracking gains in computer chipmakers in overnight trading in New York. 

The Nikkei 225 Stock Average gained nearly 3%, the broader TOPIX advanced more than 2%, and the yen hovered at 163.28 against the U.S. dollar. 

Benchmark indexes in Tokyo rebounded from the following 8% loss in the previous week; however, investor sentiment remained muted amid escalating tensions in the Middle East. 

The yen retained a downward bias, and traders prepared for the embattled currency to sink below the 167 level against the U.S. dollar before the year's end. 

The Brent crude oil price stayed at a five-week high of $88.57 a barrel, supported by escalating tensions in the Middle East and further disruption of energy shipments through the Strait of Hormuz. 

Japan Indexes and Stocks 

The Nikkei 225 stock average jumped 2.8% to 65,923.13, and the broader TOPIX increased 2.1% to 4,002.74. 

Kioxia Holdings increased 15% to ¥59,930.0, Tokyo Electron advanced 1.2% to ¥65,880.0, Taiyo Yuden gained 5.4% to ¥11,635.0, and Ibiden Co. jumped 8.5% to ¥17,025.0. 

Nippon Yusen KK jumped .02% to ¥5,717.0, Mitsui OSK Lines gained 0.8% to ¥5,655.0, and Kawasaki Kisen Kaisha Ltd. inched higher 0.6% to ¥2,741.0. 

Chinese Insurance Companies and Investment Funds Step Up Purchases Under Beijing's Directive

China's benchmark indexes edged higher after regulators stepped up efforts to shore up faltering market sentiment. 

The Hang Seng Index edged lower 0.5%, and the mainland-focused CSI 300 Index rebounded more than 1% after two state-controlled investment holding companies disclosed new purchases. 

China's securities regulator moved to soothe market sentiment and signaled additional steps to stabilize market operations, and about 40 listed companies announced stock repurchase plans. 

The state-controlled China Reform Holdings and China Chengtong Holdings increased their allocations to domestic Chinese corporations by 60 billion yuan and vowed to expand holdings to help stabilize markets.  

In addition, five state-controlled Chinese insurance companies, including Ping An Insurance Group and People's Insurance Group, highlighted the long-term investment potential of Chinese stocks. 

The leading exchange-traded funds tracking mainland-benchmark indexes experienced a surge in trading volume, confirming the regulatory intervention. 

AI startups are increasingly exploring stock listings, as the tech-focused companies ramp up technology development and commercialize new products. 

DeepSeek, Moonshot AI, and 01.ai are in early talks with investors while exploring public listing and other financing alternatives.  

China Indexes and Stocks 

The Hang Seng Index decreased 0.2% to 25,093.82, and the mainland-focused CSI 300 Index advanced 1.3% to 4,655.85. 

Hygon Information Technology gained 4.7% to ¥334.88, Cambricon Technologies gained 8.5% to ¥1,311.98, and Zhongji Innolight soared 9.6% to ¥1,099.87.