Japan Stocks Pare Gains Amid Skepticism Over Middle East De-Escalation

Japanese stocks pared earlier gains on Tuesday as investors remained unconvinced that President Donald Trump’s decision to delay strikes on Iranian energy infrastructure would lead to a lasting breakthrough in the Middle East conflict. The Nikkei 225 index closed up 1.4% at 52,252.28 points, after jumping as much as 2.3% earlier in the session. Similarly, the broader Topix index rose 2.1% to 3,559.67 points, retreating from a 2.6% peak.

Market sentiment shifted as Iran denied entering into negotiations with the U.S., driving oil prices higher and prompting a wave of profit-taking. Tomoichiro Kubota, senior market analyst at Matsui Securities, noted that many investors view the current diplomatic overtures as a "temporary delay tactic" rather than a solution to tensions surrounding the Strait of Hormuz. Despite the cautious tone, the market was supported by a 17.1% surge in Tokyo Marine Holdings following Berkshire Hathaway’s announcement of a $1.8 billion strategic stake. However, Nintendo tumbled 4.8% on reports of a 30% production cut for its Switch 2 console due to weak U.S. sales.