Japan is seeking to agree with its Asian partners on joint action plans to enhance crude oil reserves in the region, as part of a move aimed at increasing energy security and confronting the risks of supply disruption, against the backdrop of the repercussions of the US-Israeli war on Iran.
Japanese Minister of Economy, Trade and Industry Ryusei Akazawa said on Tuesday that Tokyo aims to reach an agreement on support measures during the ministerial meeting of the “Zero Emissions Asia Community,” which is led by Japan and will be held in the Philippines on Thursday.
The step comes within the “Asia-Broad Partnership to Enhance Energy and Resource Resilience” initiative proposed by Prime Minister Sanae Takaichi in April, and includes financial support worth $10 billion to help Asian countries secure energy resources and increase their reserves.
Akazawa explained that Japan will discuss with the participating countries possible support measures, with the aim of agreeing on practical plans during the meeting, at a time when supply disruptions related to the war on Iran have increased concerns about energy security in Asia.
The initiative is particularly important given the dependence of a large number of Asian economies on oil and gas imports, which makes the region highly vulnerable to any disturbances in crude flows from the Middle East or a sharp rise in prices.
In parallel with the ministerial meeting, Japan intends to host a special session with Saudi Arabia and the UAE, aimed at strengthening cooperation between oil-producing countries and Asian consumers, and supporting the global energy system’s ability to confront shocks.
Akazawa said that Japan seeks to play a “central” role linking oil-producing countries in the Middle East and Asian consuming countries, thus enhancing supply security and coordination between both sides of the market.
The move comes after a series of Japanese measures to confront oil market turmoil. Tokyo has previously released quantities of its national reserves as part of coordinated international movements.
The new initiative indicates Japan's move towards expanding its response from managing its domestic reserves to building a regional network more capable of dealing with energy crises, by increasing reserves and enhancing cooperation with major producers in the Middle East, at a time when supply and price risks remain one of the most prominent challenges facing Asian energy-importing economies.
Japanese stocks rose on Tuesday, with the Nikkei index exceeding the level of 70,000 points, benefiting from Wall Street’s gains and the decline in oil prices, while strong demand at an auction for 10-year government bonds contributed to allaying fears that yields would continue to rise. However, the debt market remained under pressure from concerns about government spending plans and rising borrowing costs.
The Nikkei ended the session up 1.1 percent at 70,683.98 points, while the broader Topix index rose 0.9 percent to 4,183.56 points. The rise was characterized by a wide range of gains, as 165 stocks rose out of the 225 components of Nikkei, compared to a decline of 55 stocks, and five remained stable.
Stock gains accelerated during afternoon trading after the 10-year government bond auction attracted the strongest demand since May, alleviating fears of debt market turmoil and helping yields fall from their highest levels during the session.
Masahiro Ichikawa, a strategist at Sumitomo Mitsui DS Asset Management, said that the auction results were “very good” and confirmed the presence of strong demand from investors, which provided some reassurance that returns would not continue to rise continuously, threatening the performance of the stock market.
Japanese bonds were subjected to strong pressure during October, with increasing concerns about Prime Minister Sanae Takaichi's expansionary fiscal policy, coinciding with a wave of selling in global debt markets, especially French bonds.
On Monday, Takaichi pledged to “control” bond issuances and move quickly if the markets witnessed unexpected disturbances, in an attempt to reassure investors about the sustainability of public finances.
In the debt market, the 10-year Japanese bond yield rose 1.5 basis points to 3.1 percent, after paring its gains following the auction results. The twenty-year yield also declined from its peak during the session to reach 3.98 percent, after touching 3.99 percent, which is the highest level in three decades.
As for the 30-year bond yield, it recorded at the beginning of trading a new record level at 4.24 percent, before reaching 4.235 percent, rising by 0.5 basis points. The five-year bond yield rose 2.5 basis points to 2.385 percent, while the two-year bond yield rose two basis points to 1.925 percent.
The stock market also benefited from the positive performance of US stocks, after the three main Wall Street indices closed higher, and the Nasdaq index recorded a record level supported by the rise of major technology companies, including NVIDIA.
But Japanese technology stocks delivered a mixed performance. The shares of chip testing equipment company “Advantest” jumped 3.9 percent, and the shares of cable company “Fujikura” rose 5.2 percent, to be among the biggest gainers on “Nikkei.” On the other hand, the shares of SoftBank Group, which has significant exposure to artificial intelligence investments, fell 3.1 percent, recording the worst performance among the components of the index.
Wataru Akiyama, a strategist at Nomura Securities, said that investors have become more selective in evaluating stocks, as it is determined whether companies are overvalued or undervalued according to their current price levels.
The decline in oil prices had a clear positive impact on the Japanese market. Japan relies heavily on energy imports, especially from the Middle East, which makes the rise in crude prices a factor putting pressure on the costs of companies, households, the trade balance, and inflation.
At the same time, developments in global bond markets remain a risk factor. French borrowing costs rose amid selling linked to fears of the government's plans to reduce the deficit and contain high debt.
Investors' eyes are now turning to the statements of Bank of Japan Governor Kazuo Ueda, searching for signals about the pace of future increases in interest rates. Between the decline in oil and the strength of stocks on the one hand, and the rise in returns and financial fears on the other hand, monetary and fiscal policies remain the factors that most influence the direction of Japanese markets during the coming period.
Hong Kong stocks rose during trading on Tuesday, tracking the improvement in overseas markets, with pharmaceutical and technology companies leading the gains, offsetting continued pressure on the shares of real estate development companies. The standard Hang Seng Index rose 0.78 percent by mid-session, while the Hang Seng Chinese Enterprises Index rose 0.82 percent.
The biotechnology sector was one of the most prominent market drivers. The Hang Seng Biotechnology Index jumped by about 3 percent, while the Hang Seng Technology Index rose 0.87 percent. “Wu Shi Biologicals” shares topped the main index’s gains, rising 4.2 percent, while “Sino Biopharmaceuticals” shares rose 4.1 percent.
Technology and Internet stocks also achieved notable gains. Shares of Sany Optical, Baidu, Kuaishou, and Alibaba rose by rates ranging between 2.8 and 3.7 percent.
The trading came in light of the continued closure of financial markets in mainland China on the occasion of the National Day holiday, with activities scheduled to resume on October 8th.
On the other hand, the real estate sector remained a weak point in the market. Sun Hong Kai Properties shares fell 0.4 percent, and CK Asset fell 0.3 percent.
Brokerage company UOP Kai Hian said it expects residential real estate prices to continue moving within a limited range throughout 2026.
New World Development shares fell 3.8 percent, after the company launched a debt swap offer, allowing holders of some bonds due in 2027 and 2028 to replace new debts guaranteed by them due in 2032.
The performance of Tuesday’s session reflects the continued disparity between Hong Kong’s sectors. Technology and pharmaceutical companies benefit from improved investor appetite, while real estate companies remain under pressure from price expectations, financing burdens, and debt restructuring.
