TOKYO – Japan’s stock market eked out a marginal gain on Tuesday, November 25, as an early tech-led rally faded into a mixed close. The Nikkei 225 finished just 0.07% higher at 48,659.52, while the broader Topix slipped 0.21% to 3,290.89. [1]
After a public holiday on Monday, Tokyo reopened with a bang: the Nikkei jumped more than 1% at the open and briefly traded above the 49,000 mark, riding on a strong rebound in U.S. technology and AI stocks. [2] But the good mood didn’t last. A near‑10% plunge in SoftBank Group erased most of those gains and left Japan lagging other major Asian markets for the day. [3]
Key takeaways from today’s Japan stock session
- Nikkei 225: +0.07% at 48,659.52
- Topix: −0.21% at 3,290.89, now just under 3% below its 52‑week high
- SoftBank Group: −9.95%, wiping an estimated 338 points off the Nikkei’s advance
- Winners: Chip names Advantest and Tokyo Electron, plus drugmaker Eisai, all jumped sharply
- Pressure points: Utility giant TEPCO and airline stocks such as ANA and Japan Airlines fell
- Macro backdrop: Fiscal worries, a weak yen, high government bond yields and China‑Japan tensions fed into the emerging “Sell Japan” narrative
Index performance: early surge, SoftBank hangover
The headline numbers mask a volatile session. The Nikkei 225 was up as much as 1.14% intraday as traders returned from a holiday, buoyed by a second straight day of gains on Wall Street and renewed optimism around artificial intelligence shares. [4]
By the close, however, the Nikkei’s advance had shrunk to just 33.64 points, or 0.07%, while the Topix lost 6.84 points to 3,290.89. [5]
Turnover on the broader Topix was solid, with volume of around 2.66 billion shares, slightly above the recent three‑month average, underlining that today’s reversal was driven by active repositioning rather than a sleepy post‑holiday drift. [6]
SoftBank’s AI problem: when Google’s Gemini hits Tokyo
The day’s dominant story was SoftBank Group. The conglomerate’s shares slumped 9.95%, ending as one of the worst performers on the Nikkei. [7]
According to the Reuters report carried by The Economic Times, SoftBank’s slide was driven by investor anxiety over intensifying competition in generative AI after Alphabet’s Google rolled out the latest version of its Gemini model. [8] Markets zeroed in on the fact that SoftBank has been a high‑profile backer of OpenAI’s ChatGPT ecosystem, and some traders questioned whether the group’s AI bets could be overshadowed as Google doubles down on its own platform. [9]
Kazuaki Shimada, chief strategist at IwaiCosmo Securities, noted that SoftBank’s fall was unusually idiosyncratic: Japan’s AI‑linked heavyweights often move together, but other big tech names gained even as SoftBank cratered. [10]
Crucially, SoftBank’s near‑10% drop alone shaved an estimated 338 points off the Nikkei — more than ten times the net gain the index managed to keep by the closing bell. [11] Without that drag, the benchmark would have delivered a much more convincing rebound from last week’s sharp selloff.
Tech and healthcare: the bright spots of the session
Away from SoftBank, the mood across much of the technology complex was noticeably more upbeat:
- Advantest, a major chip‑testing equipment maker, rose about 4.2%.
- Tokyo Electron, another heavyweight in semiconductor gear, added roughly 3.1%. [12]
- Earlier in the day, Toppan Holdings and Sumitomo Electric Industries were among the top gainers, climbing around 7% and 6% respectively as investors snapped up stocks that had been hit hard in the recent AI‑related correction. [13]
These gains mirrored Monday’s tech rally on Wall Street, where the Nasdaq surged on renewed enthusiasm for AI and growing confidence that the U.S. Federal Reserve will deliver another rate cut in December. [14]
Healthcare also had its moment. Eisai, co‑developer of Alzheimer’s drug Leqembi, jumped roughly 7.4% after Novo Nordisk reported that trials of its semaglutide‑based treatment did not slow Alzheimer’s progression, reinforcing the perceived competitive edge of Eisai’s therapy. [15]
In breadth terms, there were 122 gainers versus 99 losers on the Nikkei, underscoring that despite the headline‑grabbing plunge in SoftBank, the underlying market tone across sectors was slightly positive. [16]
Utilities and travel stocks hit: TEPCO, ANA and JAL under pressure
Some of the day’s sharpest losses came in sectors facing very specific headwinds.
TEPCO and the nuclear restart overhang
Tokyo Electric Power Company Holdings (TEPCO) sank about 6.4%. [17] A regional governor recently approved a partial restart of the utility’s Kashiwazaki–Kariwa nuclear power plant — the first potential restart of a TEPCO reactor since the Fukushima Daiichi disaster in 2011. [18]
While the restart could eventually improve TEPCO’s long‑term earnings profile by reducing reliance on imported fossil fuels, the approval also reopens political and regulatory risks. Traders appear to be treating the news as a catalyst for taking profits after a strong run, while also pricing in the uncertainty that accompanies nuclear restarts in Japan.
Airlines and the China–Japan dispute
Japan’s airline stocks also struggled. ANA Holdings and Japan Airlines fell roughly 0.6% and 1.8%, respectively, after reports that thousands of Chinese tourists had cancelled trips to Japan and that Chinese carriers were extending flight cuts into next year. [19]
MUFG’s FX strategy note highlighted that Chinese authorities have asked airlines to keep reduced Japan services in place until at least March, while state‑linked agencies have scaled back group tours. [20] Tourism from China had previously been a powerful tailwind: between January and October, the number of Chinese visitors to Japan rose more than 40% year‑on‑year to 8.2 million, accounting for around 24% of total inbound tourist spending. [21]
The hit to travel and hospitality names is therefore not just a sentiment story; it feeds directly into earnings expectations for one of Japan’s key service‑sector growth engines.
The macro backdrop: “Sell Japan” fears, high yields and a weak yen
Today’s hesitant price action can’t be understood without looking at the broader storm brewing around Japan’s assets.
Triple blow: stocks, bonds and the yen
In the past week, Japanese markets have been buffeted by what some analysts have dubbed a “Sell Japan” trade: simultaneous pressure on equities, government bonds and the yen. [22]
Data cited by CGTN show that the Nikkei 225 recently dropped more than 3% in a single session, wiping out over $120 billion in market value. At the same time, 10‑year Japanese government bond (JGB) yields climbed above roughly 1.8%, their highest level in nearly 17 years, while 30‑year yields touched multi‑decade peaks. [23]
The currency side of the triangle is equally unsettling: the yen has slid beyond the 156–157 per dollar area in recent days, approaching the psychologically sensitive 160 level that has previously sparked talk of official intervention. [24]
Fiscal worries under new PM Takaichi
Markets are also wrestling with the policy stance of new Prime Minister Sanae Takaichi, who has signalled support for aggressive fiscal expansion. According to reports cited by Reuters, the government is drawing up an economic package that could exceed 20 trillion yen, funded by an extra budget of around 17 trillion yen. [25]
Japan already carries one of the largest public‑debt burdens in the world, with government liabilities projected to climb to roughly 249% of GDP in fiscal 2025 and interest payments consuming a rising share of tax revenue. [26] More debt‑financed spending risks putting additional upward pressure on bond yields and may keep the yen under strain, especially if investors doubt the Bank of Japan’s willingness to tighten policy more aggressively.
Bank of Japan in focus: growth, inflation and rate‑hike timing
Monetary policy is the other key piece of the puzzle.
BOJ signalling and market pricing
Bank of Japan Governor Kazuo Ueda has already taken the country out of its era of negative rates and overseen two hikes, bringing the policy rate to around 0.5%. [27]
In a high‑profile meeting last week, Ueda and senior economic ministers agreed to monitor markets with a “strong sense of urgency,” particularly in light of the yen’s weakness and the prospect of a large fiscal package. [28] After the meeting, Finance Minister Satsuki Katayama indicated she had “no particular objection” to Ueda’s gradual tightening path, even as she pushed for careful communication with markets. [29]
MUFG’s rate strategists note that markets are now pricing roughly 9 basis points of additional tightening by December and around 22 basis points by January, implying expectations of another BOJ hike either late this year or early next. [30]
Growth momentum vs. cost pressures
On the activity side, the latest flash Purchasing Managers’ Index (PMI) data from S&P Global paint a cautiously encouraging picture. The composite PMI for Japan rose to 52.0 in November, its joint‑highest reading in about 15 months, signalling continued expansion driven by the services sector, even as manufacturing output remains under pressure. [31]
The survey also showed business confidence climbing to a 10‑month high and suggested that GDP could be growing at a quarterly pace of just over 0.5%, above the long‑term average. [32] However, yen weakness is amplifying input costs, pushing price pressures higher and keeping headline inflation above the BOJ’s 2% target, which in turn strengthens the case for additional tightening. [33]
Labor unions push back against inflation squeeze
Domestic politics are adding another layer of complexity. In an interview published today, Tomoko Yoshino, head of the powerful labor federation Rengo, urged the Takaichi administration to step up its fight against inflation so that wage gains can outpace rising living costs. She warned that with the yen this weak, import prices could climb further, eroding household purchasing power. [34]
Her comments underscore the delicate balancing act facing policymakers: push rates up too slowly and households remain squeezed; move too quickly and the fragile recovery — especially in manufacturing and tourism — could stall.
How Japan compares with the rest of Asia today
Across the region, most major Asian indices ended higher on Tuesday as technology shares rebounded and traders grew more confident that the Fed will deliver a December rate cut. [35]
- Hong Kong’s Hang Seng index gained more than 1%.
- South Korea’s KOSPI added close to 1%.
- Mainland Chinese benchmarks also advanced on the back of tech and chip names. [36]
Japan, by contrast, lagged its peers. While the Nikkei did manage to close in positive territory, its 0.07% rise was modest compared with gains elsewhere, and the Topix actually fell on the day. [37]
Investing.com’s regional wrap attributed this underperformance partly to lingering fiscal concerns, elevated JGB yields and the unresolved diplomatic spat with Beijing, all of which weighed on Japanese travel and consumer names. [38]
What today’s moves mean for investors
For domestic and global investors watching Japan, today’s session reinforces several themes:
- Single‑stock risk is high at the top of the index.
SoftBank’s near‑10% plunge was enough to almost completely erase what would otherwise have been a solid relief rally. Concentration risk in a handful of tech and investment conglomerates remains a defining feature of the Nikkei. [39] - The AI trade is still alive — but more selective.
The split between SoftBank on one side and chip‑equipment makers like Advantest and Tokyo Electron on the other shows that investors are differentiating between AI infrastructure plays and higher‑beta, story‑driven exposure. [40] - Macro risks are increasingly Japan‑specific rather than purely global.
Other Asian markets responded positively to the same Fed‑related rate‑cut narrative that initially lifted Tokyo, but Japan’s rally faded under the weight of its own fiscal, currency and geopolitical issues. [41] - Policy signals from BOJ and the government will be decisive into year‑end.
With PMI data pointing to moderate growth and inflation still above target, markets are already leaning toward another BOJ hike in December or January. At the same time, the scale and funding of Takaichi’s stimulus package, as well as any concrete steps to support real wage growth, will heavily influence sentiment toward Japanese equities, JGBs and the yen. [42]
Looking ahead
Short‑term traders will be watching whether the 49,000 level on the Nikkei, briefly reclaimed today, can be sustainably cleared in the coming sessions. A convincing move higher would suggest that the market has absorbed the recent “Sell Japan” scare, while repeated failures around that zone could invite another wave of profit‑taking. [43]
For longer‑horizon investors, the bigger question is whether Japan can navigate its tricky combination of:
- still‑accommodative but gradually tightening monetary policy,
- expansive fiscal plans under a new prime minister,
- structural growth reforms and upbeat services activity, and
- persistent external shocks from geopolitics and trade. [44]
Today’s mixed close — modest index gains, strong pockets in tech and healthcare, and pronounced weakness in a few high‑profile names — perfectly captures that balancing act. The Japan stock market is still very much open for business, but the margin for policy and corporate missteps is getting thinner as global investors weigh whether to buy the dip or keep leaning into the “Sell Japan” trade.
References
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