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TOKYO — Japan’s benchmark Nikkei 225 stock average rocketed more than 2.8% to close at a record 65,158.19 on Monday, breaching the 65,000 mark for the first time as optimism over potential progress in U.S.-Iran negotiations eased fears about energy supplies and boosted global risk appetite.

The index gained 1,819.12 points, or 2.87%, in Tokyo trading, according to data from Nikkei Inc. It hit an intraday high of 65,408.87. The broader Topix index rose about 1.4% to 3,946.67. Trading volume was solid as investors piled into exporters, technology shares and energy-sensitive names.

The surge came after U.S. President Donald Trump signaled that talks aimed at ending the conflict with Iran were advancing. Reopening the Strait of Hormuz — a critical chokepoint for global oil shipments that had been disrupted by the fighting — would relieve pressure on energy prices and benefit import-dependent Japan. Oil prices fell sharply on the news, with U.S. crude dropping more than $4 a barrel in early trading.

“This news sparked a drop in oil prices along with gains in Japanese government bonds and the yen, adding to signs of improving risk sentiment,” said Maki Sawada, an equities strategist at Nomura Securities.

Even so, Sawada cautioned that any agreement faces hurdles. “Even if an agreement is reached, there remains uncertainty regarding whether it will be adhered to, as the Iranian government may not be united on the issue,” she said. “The 65,000 mark is a psychological milestone, so reaching this level has led to some caution and selling pressure at such a high price range.”

Monday’s rally capped a strong run for Japanese shares. The Nikkei has climbed more than 70% over the past year, driven by a mix of corporate governance reforms, resilient earnings — particularly in technology and semiconductors — and periodic weakness in the yen that has helped exporters. Foreign investors have returned in force, drawn by relatively attractive valuations compared with U.S. markets and efforts by the Tokyo Stock Exchange to push companies toward higher shareholder returns through buybacks and dividends.

Technology and AI-related stocks led the gains. SoftBank Group jumped nearly 12% in recent sessions on optimism around its portfolio companies, including potential U.S. listings. Chip equipment makers such as Tokyo Electron and Advantest also advanced, riding global enthusiasm for artificial intelligence infrastructure. Exporters like Toyota and Sony benefited from both the risk-on mood and a slightly softer yen.

The rally reflects broader market dynamics. Strong U.S. tech earnings earlier in the month, including upbeat forecasts from companies like Advanced Micro Devices, spilled over into Japanese suppliers. At the same time, easing geopolitical tensions provided a catalyst that many investors had been waiting for after weeks of volatility tied to Middle East risks.

“Today’s sharp gain of the Nikkei was led by the strong performance of chip shares, driven by Advanced Micro Devices’s strong forecast,” said Takamasa Ikeda, a senior portfolio manager at GCI Asset Management. “The contents of the U.S.-Iran peace proposals are thin, but there is an expectation in the market that further military action will not take place.”

Japan’s economy remains sensitive to energy costs. As a major importer with limited domestic resources, the country has faced headwinds whenever oil prices spiked due to the Iran conflict. Analysts estimate that a sustained reopening of the Strait of Hormuz could shave billions off Japan’s annual import bill and support consumer spending and corporate margins.

The Bank of Japan has been navigating a complex environment. With inflation above target and signs of wage growth, markets have priced in the possibility of further rate hikes later in 2026. A stronger yen on Monday — the dollar fell to around 158.80-159 yen — could temper some exporter gains but also reflects improved confidence. Japanese government bonds rallied, pushing yields lower.

Broader Asian markets joined the upbeat mood, though trading was thin due to holidays in South Korea and Hong Kong. Australia’s S&P/ASX 200 added 0.4%. China’s Shanghai Composite rose nearly 1%. U.S. stock futures pointed higher.

Still, analysts warn that the rally could prove vulnerable. The Nikkei has moved sharply in both directions this year amid shifting oil prices, U.S. policy signals and domestic political developments under Prime Minister Sanae Takaichi’s government. Corporate earnings for the fiscal year ending in March 2027 will be closely watched for any signs that higher energy costs or yen fluctuations have dented profitability.

The milestone above 65,000 comes more than three decades after the index last set records in the late 1980s bubble era. Today’s market is fundamentally different — underpinned by real earnings growth rather than speculation — but the speed of the advance has raised questions about valuations in certain sectors.

Looking ahead, investors will parse upcoming economic data from Japan and the United States, as well as any further updates from Washington and Tehran. A durable peace deal could open the door to sustained gains, while any breakdown in talks might reignite volatility.

For now, the mood in Tokyo trading rooms was celebratory. Floor traders at the Tokyo Stock Exchange watched the electronic board tick higher through the afternoon session, with the close confirming the record finish shortly after 3 p.m. local time.

The performance underscores Japan’s renewed prominence in global portfolios. Once dismissed as a stagnant market, the country has benefited from structural changes, including pressure on companies to deploy capital more efficiently and a central bank that has gradually normalized policy after years of ultra-loose settings.

Yet challenges remain. Demographic headwinds, high public debt and exposure to global supply chain disruptions mean the rally is far from guaranteed. Economists at Nomura and other institutions forecast continued but moderating growth, with risks tilted toward external shocks.

Monday’s trading capped what has been a remarkable recovery and expansion for Japanese equities. From levels below 30,000 just a few years ago, the Nikkei has more than doubled, reflecting both cyclical tailwinds and longer-term repositioning by international investors seeking diversification away from concentrated U.S. tech exposure.

As markets digest the geopolitical developments, attention will shift to corporate results and policy signals. The coming weeks could determine whether this breakout above 65,000 marks the start of a new leg higher or a peak that tests investor conviction.

SAN ANTONIO — Victor Wembanyama delivered a commanding performance with 33 points, eight rebounds, five assists and three blocks, leading the San Antonio Spurs to a 103-82 victory over the Oklahoma City Thunder on Sunday night and evening the Western Conference finals at two games apiece.

The 7-foot-4 Frenchman set the tone early, drilling a 3-pointer on the game’s first possession and rejecting a Chet Holmgren dunk attempt. He capped the first half with a logo-range buzzer-beater, sending the Frost Bank Center crowd into a frenzy as the Spurs built an insurmountable lead.

San Antonio dominated from the opening tip, embarking on a 16-0 run in the first quarter and never trailing after the initial minutes. The Spurs led by as many as 25 points, forcing 20 turnovers from the Thunder while holding them to a season-low 82 points on 33% shooting from the field, including 18% from beyond the arc.

Wembanyama finished 11 of 22 from the field and 3 of 7 from three-point range in 31 minutes. Devin Vassell and Stephon Castle each added 13 points for the Spurs, while De’Aaron Fox contributed 12 points, a playoff career-high 10 rebounds and five assists.

The Thunder, who led the series 2-1 entering the game, struggled across the board. Shai Gilgeous-Alexander managed 19 points but had limited space to operate against San Antonio’s length and switching defense. Oklahoma City was missing key contributors due to injury, further hampering their offense.

Wembanyama credited the team’s collective defensive effort rather than any single adjustment after their Game 3 loss. “We’ve got good individual defenders so when we connect individual and team defense, it holds teams to low-scoring numbers,” he said.

On the Spurs’ approach coming into Game 4, Wembanyama emphasized consistency. “We just responded. It was nothing amazing. It wasn’t magic. We just did what we needed to do.”

The victory marked a strong response for the second-seeded Spurs, who had dropped Game 3 at home 123-108. With the series shifting back to Oklahoma City for Game 5 on Tuesday, San Antonio showed it can compete with — and at times overwhelm — the top-seeded Thunder, the defending champions.

San Antonio’s defense was the story. The Spurs disrupted Oklahoma City’s rhythm, turning potential transition opportunities into points off turnovers, tallying 25 such points. Holmgren and the Thunder frontcourt faced constant pressure from Wembanyama’s rim protection and mobility.

Offensively, Wembanyama’s versatility shone. He mixed mid-range jumpers, drives to the rim and perimeter shooting while facilitating for teammates. His half-court buzzer-beater provided both momentum and a highlight that quickly spread across social media.

For the Thunder, the loss represented their lowest postseason output of the season. Coach Mark Daigneault’s squad, known for its depth and pace, could not generate easy looks. Gilgeous-Alexander, the two-time MVP, was held in check relative to his standards, facing constant harassment from Spurs defenders.

The series has been competitive and physically demanding. Oklahoma City took Game 1 in double overtime but lost Game 1? Wait, series history shows back-and-forth battles highlighting young talent on both sides. Wembanyama has averaged strong numbers throughout, but Game 4 represented his most complete outing.

Analysts noted the Spurs’ ability to dictate tempo. By slowing the game and emphasizing half-court execution, San Antonio neutralized much of Oklahoma City’s transition game. Turnovers proved costly for the Thunder, who appeared out of sync for long stretches.

Gregg Popovich, the Spurs’ legendary former coach still influential in the organization, has been a presence. Players have referenced his teachings on resilience and preparation. The team’s focus after the Game 3 defeat paid dividends in a dominant home performance.

Wembanyama, in just his third NBA season, continues to elevate his game on the biggest stage. His combination of size, skill and basketball IQ has made him a nightmare matchup for Oklahoma City’s bigs. The French star has drawn comparisons to all-time greats for his two-way impact.

Looking ahead to Game 5, the Thunder will need to regain their offensive flow and limit turnovers. Home-court advantage returns to Paycom Center, where Oklahoma City has been strong. Adjustments on defending Wembanyama and containing San Antonio’s role players will be critical.

For the Spurs, sustaining defensive intensity and getting contributions from the supporting cast remain keys. Vassell, Castle and Fox must continue providing secondary scoring and playmaking to complement Wembanyama’s dominance.

The Western Conference finals have lived up to expectations as a clash between two of the league’s brightest young cores. The Thunder entered as favorites with their regular-season success and championship experience, but San Antonio has proven resilient under first-year head coach Mitch Johnson.

Injuries have played a role, with both teams navigating absences. How each side adapts will shape the remainder of the series. A potential Game 7 in San Antonio looms as a possibility if the road teams continue splitting results.

Basketball observers have praised the series for its entertainment value and showcase of future stars. Wembanyama’s emergence as a playoff force adds another chapter to his rapid ascent. At 22 years old, he already carries the weight of franchise expectations with poise.

The Spurs’ defensive schemes in Game 4 highlighted their growth. Multiple defenders rotated effectively, using length to contest shots without fouling. This connected defense limited Oklahoma City’s 3-point attempts and paint scoring.

Off the court, the atmosphere in San Antonio was electric. Fans chanted and roared with each Wembanyama highlight, creating a playoff environment that energized the home team. The logo shot to close the half became an instant classic moment.

As the series heads to Oklahoma City, both teams face pressure. The Thunder must avoid a home loss that would hand San Antonio a 3-2 lead, while the Spurs aim to steal another road win and move within one victory of the NBA Finals.

Wembanyama downplayed individual heroics. “We all have high standards and I know I have a lot of responsibilities, but I’m here for it,” he said. “Yeah, it was better today. It wasn’t perfect.”

The coming games will test endurance and adaptability. With the season on the line, small adjustments in defensive rotations, offensive sets and rebounding battles could decide the outcome.

San Antonio’s ability to “shut down” the Thunder in Game 4 answered questions about their competitiveness. Whether they can replicate that level on the road remains to be seen. The series, now a best-of-three, promises more drama as two powerhouse teams battle for a chance at the championship.