Donald Trump claimed in his speech that Iran is reviving its nuclear program alongside negotiations with Washington and warned that if talks fail, the option of military action will be considered. Iranian officials rejected the claim, and Abbas Araghchi stressed that Iran’s nuclear program is purely peaceful and that Tehran will never seek nuclear weapons. At the same time as the negotiations, the United States has increased its military presence in the Middle East. Inspectors from the International Atomic Energy Agency have not been able to verify the status of Iran’s near weapons grade uranium stockpiles for more than eight months. The uncertainty surrounding the true state of Iran’s nuclear activities and the continuation of negotiations has preserved an atmosphere of tension and uncertainty.

Trump delivered a 100 minute speech. Trump focused almost entirely on the economy in his State of the Union address and tried to present a very positive picture of current conditions. He said inflation is declining sharply, incomes are rising quickly, and the US economy is booming more than ever. He also emphasized that tariffs on imports will continue and argued that these tariffs can replace tax revenues.

The Nikkei 225 rose 1.4% to 58,740, setting a fresh all time record, with gains supported by renewed demand for technology and semiconductor stocks. The weakening yen against the US dollar has strengthened the profitability of Japan’s export oriented companies and is seen as one of the key drivers of the rally. Reports from Sanae Takaichi’s meeting with the Bank of Japan indicate the government remains cautious about raising interest rates, boosting expectations that supportive policies will continue. Meanwhile, Donald Trump’s speech in the United States failed to provide a new catalyst for global markets, prompting part of international liquidity to shift toward Asian markets, especially Japan.

Haruhiko Kuroda, the former governor of the Bank of Japan, said the country’s economy is in a strong position but needs tighter monetary and fiscal policies to contain inflation risks. Kuroda suggested the central bank could raise interest rates twice per year in 2026 to 2027, bringing them to around 1.5 to 1.75%. He warned that government spending and tax cuts under Sanae Takaichi could intensify inflationary pressures and push bond yields higher. Kuroda also described the yen’s depreciation to around 167 per dollar as excessively weak and a factor that could further fuel inflation.