Japan and South Korea Stocks Open Higher as Trade Data Signals Recovery

TradingKey - On Wednesday (March 18), Asia-Pacific markets performed strongly in early trading, with Japanese and South Korean stocks opening higher; the Nikkei 225 index opened 0.9% higher, while South Korea's KOSPI opened up 2.2%.

Gains subsequently widened. As of press time, the Nikkei 225 index was up 1.52% on the day, and the KOSPI's gains further extended to 3.75%.

Meanwhile, the Japanese government bond market saw yields decline: the 30-year yield fell 2.5 basis points from the previous session to 3.525%, and the 2-year yield dropped 1.5 basis points to 1.255%, reflecting market expectations that the Bank of Japan will maintain its accommodative policy.

Latest trade data released by Japan's Ministry of Finance on Wednesday showed that total exports in February 2026 grew 4.2% year-on-year, the sixth straight month of growth and significantly above the market forecast of 1.6%, indicating that global demand remains a strong support for Japanese exports.

Driven by both export growth and slower-than-expected import growth, Japan recorded a trade surplus of 57.3 billion yen (approximately $361 million) in February, compared with the market consensus of a 483.2 billion yen trade deficit; the unexpected shift to a surplus has provided new momentum for the Japanese economic recovery.

The Cabinet Office previously revised its 2025 fourth-quarter economic growth forecast upward to an annualized 1.3%, primarily due to strong corporate investment, indicating that the Japanese economy has shown a moderate recovery trend.

However, analysts warned that the recent surge in oil prices caused by the Middle East conflict is exacerbating stagflation risks for Japan. As the world's fourth-largest economy, Japan is heavily dependent on energy imports, and rising oil prices could impact its economy.

The market widely expects the Bank of Japan to keep interest rates unchanged at the conclusion of its two-day monetary policy meeting on Thursday, but signal a continued tightening bias to counter inflationary pressures from yen weakness and rising oil prices.