A strong rally in Japan’s iPhone-linked tech stocks is breathing fresh life into the Nikkei, following a surprise shift in U.S. trade policy. While geopolitical uncertainty continues to cast shadows, selective tariff exclusions on key electronics have ignited bullish sentiment across Tokyo’s prime market. Investors are rethinking their stance as a temporary reprieve fuels hopes for more stable conditions in the tech supply chain.
Japan’s Nikkei share average closed up 1.18% at 33,982.36, rebounding strongly from recent weakness. The index had climbed as much as 2.22% earlier in the session, buoyed by renewed investor appetite for technology shares. The broader Topix followed suit, ending the day 0.88% higher at 2,488.51. While geopolitical tensions still cloud investor confidence, specific sector strength—particularly in smartphone-related stocks—delivered a welcome lift.
At the heart of the rally was the U.S. administration’s decision to exempt smartphones, computers, and select electronics from sweeping new import tariffs. These exemptions, largely favouring imports from China, provided a significant tailwind for major technology players such as Apple, which relies heavily on overseas manufacturing and components. For Japanese firms entrenched in Apple’s global supply chain, the news spurred immediate gains. Murata Manufacturing rose 1.65%, TDK jumped 4.27%, and Taiyo Yuden surged 6%. These companies play pivotal roles in producing components essential for iPhones and other premium consumer electronics, and the tariff relief reignited investor enthusiasm for their prospects.
Chip-testing equipment maker Advantest was another standout performer, climbing 4.92% and contributing the largest single boost to the Nikkei. The company’s strong performance underscored renewed confidence in semiconductor-related demand, despite lingering concerns about the broader trade landscape.
However, this reprieve may be short-lived. Both former President Donald Trump and U.S. Commerce Secretary Howard Lutnick signalled over the weekend that while smartphones and similar electronics are currently exempt, they may still be targeted by new tariffs within the next month. These could include semiconductors and other high-value tech categories. This looming uncertainty continues to temper the market’s broader optimism.
Since Trump’s announcement of “Liberation Day” and his sweeping reciprocal tariffs earlier in the month, the Nikkei has experienced heightened volatility, declining 5% amid investor anxiety. While a temporary 90-day freeze eased immediate concerns, a 10% blanket duty on nearly all U.S. imports remains in force, keeping global markets alert to policy shifts.
Despite these geopolitical crosscurrents, Monday’s rally demonstrated the underlying strength and resilience of Japan’s tech sector. With over 80% of the 1,600 stocks on the Tokyo Stock Exchange’s prime market posting gains, the mood was overwhelmingly positive. Only 16% of stocks fell, while 2% remained flat, reflecting a market leaning towards cautious optimism.
Japan’s technology exporters remain deeply intertwined with global supply chains, particularly in the premium electronics and semiconductor segments. As such, any clarity or stability in trade policy directly impacts investor sentiment in these names. While the global trade landscape remains fluid, selective relief – such as the tariff exemptions announced—can act as powerful catalysts for recovery and revaluation.
Fidelity Japan Trust PLC (LON:FJV) aims to be the key investment of choice for those seeking Japanese companies exposure. The Trust has a ‘growth at reasonable price’ (GARP) investment style and approach – which involves identifying companies whose growth prospects are being under-appreciated or are not fully recognised by other investors.
