The Nikkei 225 stock index in Japan experienced notable volatility in late June and early July 2025. On June 26, the Nikkei rose above the 39,000-point level for the first time in approximately four months, supported by gains in U.S. technology and semiconductor stocks. This upward momentum continued, and by June 27, the index surpassed the 40,000-point mark for the first time in five months, closing at 40,150.79 points, a gain of 566.21 points from the previous day. The recovery was attributed to easing concerns over U.S. tariff policies, improvements in Middle East geopolitical tensions, and positive investor sentiment towards Chinese-related stocks. Market participants also noted increased buying interest driven by a "vacuum zone" effect and expectations of expanded mergers and acquisitions in Japan. The rally extended into late June, with the Nikkei reaching an 11-month high above 40,800 points on June 30, buoyed by optimism over the U.S. economy and anticipation of early interest rate cuts. However, on July 1, the index reversed course, falling below the 40,000-point threshold amid profit-taking and renewed concerns over U.S.-Japan trade negotiations. The decline was exacerbated by U.S. President Donald Trump's threat to impose new tariffs on Japan, targeting sectors such as rice and automobiles. The Nikkei closed July 1 at 39,986 points, ending a five-day winning streak and reflecting the market's sensitivity to trade policy developments and geopolitical factors.