Nikkei crosses 70,000 for first time: What's driving the rally?

Japan's benchmark Nikkei 225 index crossed the 70,000 mark for the first time on Tuesday, extending its rally amid easing geopolitical tensions in the Middle East, strength in artificial intelligence-linked stocks and growing investor confidence in the country's economy.

The index touched a record high of 70,020.68 before paring some gains later in the session. It was last seen up 0.13 per cent at 69,404.50. At this level, Nikkei has rallied 40.54 per cent over the last six months.

Ravi Singh, Chief Research Officer at Master Capital Services, said the rally has been supported by a combination of factors.

"Japan's benchmark index has benefited from improving economic conditions, corporate reforms and strong global investor interest in technology and semiconductor-linked companies. A weaker yen has also worked in favour of Japanese exporters, helping improve earnings expectations and supporting the market rally," Singh said.

The upmove was further aided by improved global risk sentiment following reports of an interim agreement between the United States and Iran aimed at restoring shipping through the Strait of Hormuz, a key route for global energy supplies.

The development was seen by investors as a step towards reducing uncertainty in energy markets.

Meanwhile, Brent crude traded around the $82-per-barrel mark on Tuesday, lending additional support.

Kranthi Bathini, Director of Equity Strategy at WealthMills Securities, said, "As crude oil prices declined, Japan's Nikkei index touched a record high. Lower oil prices are generally seen as supportive for many Asian economies, particularly those that are net importers of oil."

Back home, Indian equity benchmarks also moved higher today as buying in IT, energy and consumer stocks lifted sentiment.