Japanese stocks demonstrated strong performance during the week, with the Nikkei 225 advancing 1.47% to close at 69,744.07 on Friday, recovering from an earlier 1.6% decline. According to reports from Reuters, the benchmark index gained 0.5% for the week, marking a positive weekly performance despite facing valuation concerns in the technology sector. The broader Topix also showed robust gains, rising 1.24% to 4,064.60, marking its fifth consecutive session of gains - the longest such streak since October 2025. However, as Business Standard reports, the Nikkei is heading for a weekly loss despite Friday's gains, highlighting the mixed sentiment in the market. Softer US labour market data helped improve investor sentiment, though concerns over high valuations, heavy investment and rising competition in the artificial intelligence sector continued to limit gains.
Market sentiment was significantly influenced by developments in US monetary policy expectations. As reported by Reuters, a softer-than-expected US payrolls report overnight prompted traders to cut near-term bets for a rate increase by the Federal Reserve. This shift in expectations led to reduced concerns about potential US rate hikes, which benefited Japanese equities as investors became more optimistic about the domestic economic outlook. Market strategist Maki Sawada from Nomura Securities noted that expectations of early Fed rate hikes have receded, leading to firm performance in cyclical and consumer-related shares. The rebound in the yen and a decline in oil prices also helped certain sectors, according to Sawada's analysis.
Japanese economic data released on Friday provided additional support for market sentiment. According to Reuters, data showing improving services activity in Japan helped boost investor confidence. The positive economic indicators, combined with the weaker US jobs report, created a favorable environment for Japanese equities. Market strategist Maki Sawada from Nomura Securities explained that expectations of an early interest rate hike by the Fed have receded, leading to firm performance in cyclical and consumer-related shares. He added that a rebound in the yen and a decline in oil prices also helped certain sectors.
Individual stock performance was particularly strong, with Rohm leading gains at 14.18%, marking its highest close since May 2001. As reported by Reuters, Sumco followed with an 11.30% gain, setting its highest close since September 2007. Among the latest gainers, Kioxia Holdings surged 9.2% and Kokusai Electric jumped 15.1%, according to Business Standard. Other notable performers included Fast Retailing (+2.7%), Sony Group (+1.5%) and Toyota Motor (+1.3%). The mixed performance reflects ongoing concerns about technology valuations despite the overall positive market sentiment.
