Nikkei 225 Rebounds to Record Highs After Iran Tensions Ease

Japan's benchmark Nikkei 225 index is poised to close at a record high, erasing losses from earlier this week when tensions between the U.S. and Iran sparked fears of a potential conflict in the Middle East.

The Nikkei 225 rose as much as 1.2% on Friday, surpassing its previous record close set in December 2025. The index has now recovered all of the ground lost earlier this week, when it fell nearly 3% after President Donald Trump ordered a blockade of the Strait of Hormuz, a critical oil chokepoint, in response to the collapse of weekend peace talks with Iran.

Investors appear to be breathing a sigh of relief as the geopolitical situation has stabilized, at least for now. Oil prices, which spiked earlier this week on supply disruption fears, have also retreated from their highs. Brent crude, the global benchmark, is trading around $65 per barrel, down from over $70 earlier in the week.

"The market is regaining its footing as tensions with Iran appear to have eased," said Masahiro Ichikawa, a senior strategist at Sumitomo Mitsui DS Asset Management in Tokyo. "Investors are refocusing on the broader economic outlook, which remains relatively positive for Japanese equities."