A post-holiday rally just sent this stock market to a record high

• Japan's Nikkei 225 surged 5.7% on Thursday as investors piled back into tech stocks.
• Global stock rallies swept into Japan after holidays as Middle East tensions appeared to ease.
• The yen hit a 10-week high on talks of Japanese government intervention to support the currency.

A global surge in risk appetite swept into Japan after long public holidays, driving stocks to record highs on Thursday.

Japan's benchmark Nikkei 225 index surged 5.7% in its first trading session this week, catapulting the index above the psychological 62,000 level.

The rally was fueled by gains in tech stocks and rising optimism that tensions in the Middle East could cool following reports of progress toward a potential peace deal with Iran.

Among the top performers were firms in the semiconductor supply chain, including Renesas Electronics and Ibiden, as investors continued piling into companies tied to the artificial intelligence boom.

Japan's rally comes after a blistering run in global markets while the country was effectively offline from Monday through Wednesday.

In the US, the S&P 500 and Nasdaq both climbed to fresh record highs this week, while South Korea's stock market also rallied sharply.

"It seems equity investors are still looking to put money to work and are jumping on positive-sounding news from the Gulf," wrote analysts at ING in a note on Wednesday. They added that the market reaction looks "a little overblown."

Still, they said the broader market mood remains firmly risk-on as investors continue betting that the AI-driven tech rally has further room to run.

"This window of optimism on a peace deal has allowed money to flow back into equities — driven by the underlying conviction that the tech sector AI buildout will endure," added ING's analysts.

The shift in sentiment has also rippled through currency markets.

The US dollar, which had strengthened during the recent geopolitical turmoil as investors sought safety, has softened this week as hopes for de-escalation grew.

Meanwhile, the Japanese yen surged to a 10-week high, trading near 155 per dollar on Wednesday. That followed days of sharp moves that reignited speculation about intervention from Japanese authorities.

The speculation was first triggered days before, when the yen spiked to steady near the 157 after crossing the key 160 threshold.

Tokyo has not publicly confirmed any action, though Japanese officials have repeatedly warned against speculative moves in the currency market in recent months. The yen has stayed roughly 7% weaker against the dollar over the past year.

Analysts at MUFG said any intervention efforts may now be increasingly tied to unpredictable geopolitical developments rather than purely domestic policy factors.

"The Japanese authorities are more at the mercy of unpredictable factors than in the past," Derek Halpenny, MUFG's head of research for global markets EMEA, wrote on Wednesday.

Japan's stock market has been among the world's hottest in recent years, powered by corporate governance reforms, a weaker yen, and growing hopes that the world's fourth-largest economy may finally be emerging from decades of deflation.