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(Bloomberg) -- Japan’s benchmark Topix Index rose to erase all losses triggered by Donald Trump’s so-called reciprocal tariff announcement, as progress in trade talks and a slightly weaker yen fueled risk appetite.
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Gains in Toyota Motor Corp. and its group companies also boosted the broader Topix Index, with the carmaker rising 3.6% after a report that chairman Akio Toyoda has proposed a buyout of Toyota Industries Corp.
The broader Topix gained 0.9% to close at 2,650.61, just above its close on April 2, before the new US levies were announced. The blue-chip Nikkei 225 climbed 0.4% to close at 35,839.99, also above its April 2 level.
Japanese stocks’ rebound has been helped by hopes that ongoing talks will result in lower US levies on imports from Japan, easing concerns about the economic impact of Trump’s policies.
“For now, the tariff situation seems to be calming down, which is fueling some repurchase activity,” said Yutaka Miura, senior technical analyst at Mizuho Securities.
Monday’s gains were also fueled by the yen’s weakness against the dollar after a fall over the weekend, said Miura. The drop followed a meeting between Japanese Finance Minister Katsunobu Kato and US Treasury Secretary Scott Bessent on Thursday, where discussions did not touch on specific currency levels.
Toyota Industries soared 23% on Monday amid hopes of a premium from a potential buyout, after Bloomberg reported Toyota Motor chief Toyoda is considering taking it over.
READ: Toyoda Buyout Plan Lifts Shares, Raises Governance Concerns (1)
Japanese shares have been quicker to recover from the tariff rout than many other developed markets, including the US — the S&P 500 is still over 2% lower than before Trump’s announcement, with the MSCI World Index down around 1%.
Investors are optimistic that Japan might emerge stronger from tariff-induced volatility than its peers, as it was among the quickest to approach the US for negotiations.
“Japan might be treated a little bit better than some other parts of the world,” owing to its high level of investment in the US and the two countries’ strong defense ties, said Daniel Carter, investment manager of Japanese equities at Jupiter Asset Management Ltd.
But with Trump’s long-term trade policy still unclear, it’s too soon to assume Japanese stocks are off the hook, Carter added. The President paused his “reciprocal” tariffs for 90 days earlier this month, but on Friday said another reprieve was unlikely.