Japanese stocks closed the session with mixed performance, as gains in industrial and consumer stocks were offset by weakness in technology shares. According to Business Standard, the Topix index gained 0.50% to close at 4,084.74, marking its sixth consecutive session of gains - the longest winning streak since August 2025. However, the Nikkei 225 declined 0.16% to 69,630.74, as the tech-heavy index struggled despite broader market strength. The Nikkei 225 remained flat at 69,737.69 in earlier trading, as the tech-heavy index struggled for direction despite broader market strength.
The positive momentum was driven by declining oil prices and positive global market sentiment, as reported by The Economic Times. OPEC+'s decision over the weekend to increase production provided some relief to markets, while an increase in oil output targets and the reopening of the Strait of Hormuz also supported investor sentiment. Brent crude contracts traded around $71.72 a barrel in early Asian trading on Monday, down from the closing price of $72.12 on July 3rd and lower than the $72.48 on February 27th. The shipping, autos, and machinery sectors led gains in the broad market, with Toyota Motor rising 3.36% and Mitsubishi Heavy Ind. climbing 8.39%.
Technology industry suppliers faced significant declines on the Nikkei 225, with Taiyo Yuden down 10.58%, Ibiden falling 8.37%, and Murata Manufacturing losing 7.49%. As reported by Business Standard, investors continued to shift away from technology companies amid concerns over the sustainability of the AI-driven rally, along with worries about excess capacity and rising competition from Chinese AI companies. Technology and AI-related stocks such as Kioxia Holdings, Taiyo Yuden and SoftBank Group declined during the session, highlighting the sustained pressure on the sector. However, there were 177 advancers on the Nikkei 225 against 48 decliners, with Mitsubishi Heavy Industries, Shin-Etsu Chemical and Fast Retailing posting strong gains to support the broader market.
Investors remained cautious about central bank policy outlook, with the Federal Reserve signalling a hawkish stance under Chair Kevin Warsh, while the Bank of Japan is expected to continue tightening. According to The Economic Times, the yen resumed its weakening trend, putting traders on guard for potential intervention by authorities in Tokyo. Japanese government bonds (JGBs) fell sharply, with the benchmark 10-year yield rising to the highest since October 1996. The dollar index has stabilized at 100.880 on currency markets after the disappointing payroll report for June, while the euro remained flat at $1.1445 just above its recent 13-month low.
While Wall Street was closed on Friday for a holiday, Japanese equities took cues from strong performance in Europe and other overseas markets, said Maki Sawada, an equities strategist at Nomura Securities, as reported by The Economic Times. The combination of downward trend in crude prices and positive global market sentiment appears to be supporting investor confidence. However, fluctuations in AI and semiconductor-related shares will continue to influence whether the Nikkei 225 rises or falls. The Nikkei was positive in terms of breadth, with 169 advancing Nikkei shares against 56 declining ones, while industrials and transportation-related shares led gains with Kawasaki Heavy Industries surging 7.62% and Mitsubishi Heavy Industries rising 59.38%.
