Tokyo Stock Market Preview for Monday, December 8, 2025: Nikkei 225 Braces for GDP Shock, BOJ Hike Bets and Fed Cut Drama

When the Tokyo Stock Exchange opens on Monday, December 8, the market will be hit by a three‑way macro crossfire:

• Final Japan Q3 GDP lands at 8:50 a.m. JST
• Bank of Japan rate‑hike expectations are at their strongest in years
• The U.S. Federal Reserve heads into a deeply divided meeting with markets pricing in another rate cut

Put simply, the Nikkei 225 goes into Monday sitting near 50,500, caught between global risk‑on sentiment and rising domestic yields plus a firmer yen. ^[1]

Below is a detailed look at what just happened in Tokyo, what’s on Monday’s calendar, and how the latest forecasts and analysis from December 7 point the market for the next session.

1. Where Tokyo Stands After a Wild Week

Last week was a textbook “BOJ whipsaw” for Japanese assets.

Monday–Friday: From rate‑shock slump to AI surge, then back again

Monday, Dec. 1 – Rate‑hike shock

• The Nikkei 225 dropped about 1.9% to 49,303.28, while TOPIX fell 1.2% to 3,338.33.
• Selling hit both stocks and JGBs after BOJ Governor Kazuo Ueda said the bank would weigh the “pros and cons” of hiking rates at the Dec. 18–19 policy meeting, and warned that delaying tightening risked fueling inflation. ^[2]
• The 10‑year JGB yield spiked to around 1.875%, its highest since 2008, while the yen strengthened into the mid‑¥155 per dollar area. ^[3]

Tuesday, Dec. 2 – Stabilisation, but BOJ worries linger

• Asia mostly traded higher on growing Fed rate‑cut expectations, but Japanese equities lagged.
• An Asia‑Pacific wrap noted that the Nikkei only managed a modest rebound (about +0.2%) after Monday’s near‑2% slide, with commentary stressing that BOJ hike prospects were still capping risk appetite. ^[4]

Wednesday, Dec. 3 – Tech and AI lead a rebound

• The Nikkei 225 rose around 1.1% to 49,864.68, while TOPIX actually slipped 0.2%, underscoring a narrow, tech‑driven rally. TechStock²+1
• A detailed Tokyo session review highlighted AI and chip names – including major automation and semiconductor plays – as the main winners, while more domestically exposed names and financials lagged despite higher yields. TechStock²+1

Thursday, Dec. 4 – Big AI & bond‑relief rally

• Nikkei 225: up 2.3% to 51,028.42
• TOPIX: up 1.9% to 3,398.21 ^[5]
• A strong 30‑year JGB auction calmed nerves after the earlier bond sell‑off, while Xinhua and other outlets reported that AI‑linked and robotics stocks surged, with heavyweights like SoftBank Group jumping sharply and Tokyo Electron gaining over 3%. TechStock²+1

Friday, Dec. 5 – BOJ fears bite back

• Reuters reported that the Nikkei fell a little over 1% to 50,491.87, with TOPIX down roughly the same, as 10‑year JGB yields nudged toward 1.93%, an 18‑year high. ^[6]
• Strategists at Nomura said higher long‑term yields and the looming BOJ–Fed double‑header invited profit‑taking after Thursday’s rally. ^[7]

Net result: the Nikkei finished the week only slightly higher than the previous Friday – roughly +0.5% – but with huge intraday swings and a clear message: domestic yield and BOJ expectations now dominate the Tokyo narrative. TechStock²+1

2. Monday’s Big Event: Final Q3 GDP at 8:50 a.m. JST

The single most important data point for Monday’s open is the final estimate of Japan’s Q3 2025 GDP, released by the Cabinet Office at 8:50 a.m. JST, just before the cash session begins. ^[8]

What we already know from preliminary data

• Preliminary GDP (released in November) showed the economy contracted, with quarterly GDP down 0.4% q/q and about ‑1.8% annualised, largely due to weaker exports under higher U.S. tariffs and soft household consumption. ^[9]
• New corporate capex data released on December 1 showed business investment up 2.9% y/y but down 1.4% q/q, implying a softer investment contribution to the revised GDP number. ^[10]

What forecasters are saying ahead of Monday

• A GDP preview cited by TradingView expects Q3 growth to be revised slightly lower, with GDP seen falling about 0.5% q/q, annualised around ‑2.1%, as weaker capital expenditure and public investment are factored in. ^[11]
• FX and macro research from FXEmpire and other desks flags finalised GDP and wage data as key inputs into the December 19 BOJ decision, and thus a critical driver of yen and equity moves at the start of the week. ^[12]

Why GDP is such a big deal for Monday’s trading

1. Direct growth signal
   • A deeper‑than‑expected contraction would reinforce the idea that Japan is entering 2026 from a position of fragile growth, even as inflation remains above 2%. ^[13]
2. Implications for BOJ tightening
   • Softer GDP gives BOJ doves more ammunition to argue for caution, potentially tempering expectations of a more aggressive tightening path after the likely December hike.
   • A slightly better‑than‑feared print – for example, limited downside revision or an upward tweak to consumption or exports – would support the case that the economy can absorb modest rate hikes, keeping yen and JGB yields firm. ^[14]
3. Market timing effect
   • Because the data drops before the open, Nikkei and TOPIX futures, USD/JPY and JGBs may react first, with cash equities forced to catch up as soon as the opening auction begins.

Base‑case market read for Monday:
Most current commentary suggests a slightly weaker revision is already in the price. A GDP print that roughly matches expectations would likely mean choppy, range‑bound trade around the 50,000 level, while a big surprise in either direction could set a strong tone for the whole week.

3. BOJ December Hike: Almost “Baked In”, But Path Still Unclear

Monday’s GDP doesn’t exist in a vacuum – it feeds directly into the BOJ’s December 18–19 policy meeting, which is now arguably the most important Japanese central‑bank meeting in a decade.

What changed this week

• On December 1, Governor Kazuo Ueda said the BOJ would examine the pros and cons of a rate hike at the December meeting and framed any move from 0.5% to 0.75% as “easing off the accelerator, not hitting the brakes.” His remarks sent the yen and JGB yields higher and pushed the implied probability of a December hike to around 80%. ^[15]
• A Reuters follow‑up citing government sources reported that the BOJ is “likely” to raise the policy rate to 0.75% this month and that the government is prepared to tolerate the move, even under Japan’s generally dovish political leadership. ^[16]

Street forecasts: BofA and others

• Bank of America has now formally pulled forward its BOJ hike forecast to December 19, expecting a 25bp increase from 0.5% to 0.75%. The bank then anticipates roughly semi‑annual hikes with a terminal rate around 1.5% by 2027, assuming no severe economic shock. ^[17]
• Other research, including MarketPulse/OANDA commentary referenced in recent Tokyo market reviews, sees the policy rate rising toward 1% in 2026, with the BOJ trying to normalise slowly while keeping financing conditions broadly supportive. TechStock²+1

For Monday, the key takeaway is that a December hike is now the base case. What will move markets in the next session is any change in how likely investors think future hikes are, and Monday’s GDP print is central to that debate.

4. Global Backdrop: Fed Cut Odds High, but FOMC Deeply Split

Japanese investors also have one eye firmly on Washington.

Fed cut odds and Wall Street’s lead

• According to Reuters and other major outlets, futures markets now price roughly an 84–90% chance that the Fed will cut rates by 25 bp at its December 9–10 meeting, which would be the third cut of 2025. ^[18]
• Recent U.S. data show core PCE inflation running at about 2.8% y/y and mixed labour signals – soft private payrolls but jobless claims at a multi‑year low – supporting the view that the Fed can ease policy without losing its anti‑inflation credibility. ^[19]
• On Friday, Dec. 5, the Dow, S&P 500 and Nasdaq all finished modestly higher (around +0.2–0.3%), leaving the S&P near its all‑time high and providing a mildly positive lead for Asian equities on Monday. ^[20]

But the Fed is split – and that matters for the yen

• A fresh “Wall St Week Ahead” piece from Reuters on December 7 highlights one of the most divided FOMC meetings in years, with several members sceptical of further cuts even as markets price one in almost fully. The vote split and Powell’s guidance on future cuts may be more market‑moving than the decision itself. ^[21]

For Tokyo, the combination of:

• A Fed that’s likely easing, and
• A BOJ that’s likely tightening

creates a classic rate‑differential story. The narrower that gap becomes, the more pressure there is for a stronger yen and a repricing of Japanese equities, especially export‑heavy sectors.

5. Yen and JGB Watch: USD/JPY Eyes 150, Yields Near 2%

If you care about Tokyo stocks on Monday, you have to care about USD/JPY and JGB yields.

FX: Yen momentum still building

A Japanese yen weekly outlook published December 7 notes that:

• USD/JPY has fallen for a second week, driven by rising BoJ hike expectations and softer U.S. inflation.
• Analysts warn that if the Fed cuts while the BOJ hikes, USD/JPY could break below 150 and potentially move toward 140 as carry trades unwind. ^[22]

That same note emphasises that Monday’s final GDP release and wage data will be watched closely: a better‑than‑expected GDP revision or stronger consumption components would boost yen demand, intensifying pressure on exporters and foreign‑earnings‑heavy stocks. ^[23]

Bonds: 10‑year JGBs at multi‑year highs

• BOJ‑related headlines this week pushed the 10‑year JGB yield up toward 1.93%, the highest level since the mid‑2000s, according to Reuters reporting. ^[24]
• Monday’s reaction in the JGB market to the GDP data will be crucial: if revised GDP is weak and markets pare back expectations for further hikes beyond December, yields could stabilise or slip, giving equities some breathing space.

In practical terms for Monday:

• Stronger yen + higher yields → headwind for autos, exporters, and highly leveraged growth names, relative support for some banks.
• Stable or weaker yen + capped yields → more room for a broad relief rally, especially in cyclicals and tech.

6. Sector Playbook for Monday’s Session

Based on last week’s moves and the latest December 7 analysis, here’s how key sectors line up heading into Monday.

6.1 AI, chips and “Japan as an AI hub”

• Thursday’s surge showed how central AI and robotics are to the Nikkei story: an Xinhua‑sourced report via NAMPA highlighted AI‑related names driving the index to over 51,000, with AI‑powered robotics and machinery stocks posting outsized gains. ^[25]
• A weekend Nikkei‑focused analysis from TS2.Tech notes that Japan is increasingly framed as part of a “triple play” for global investors:
  1. AI‑heavy index leadership,
  2. PBR/corporate‑governance reforms, and
  3. Banks that actually benefit from higher rates. TechStock²+1

Implication for Monday:
If U.S. tech futures stay firm and the yen doesn’t spike, AI and chip names may again act as shock absorbers, with dip‑buyers stepping in even if cyclicals hesitate.

6.2 Banks and insurers: helped by higher rates, hurt by volatility

• Japanese megabanks have rallied to multi‑year highs on the back of rising yields and expectations of BOJ normalisation, but last week’s bond‑market turbulence showed that there is a limit to how fast rates can rise before equity investors get spooked. TechStock²+2Reuters+2

On Monday, watch whether:

• JGB yields stabilise below 2% – which would support a “gradual normalisation” bullish story for financials; or
• Yields continue to spike on the GDP release and global rate jitters, which could lead to profit‑taking even in bank stocks.

6.3 Exporters: autos, electronics and machinery

• Earlier in the week, yen strength into the ¥155 area pressured automakers and tech exporters, as the stronger currency squeezes the yen value of overseas earnings. ^[26]

For Monday:

• A yen break lower in USD/JPY (toward 150) after the GDP print would likely weigh on autos, industrial exporters and some tech hardware.
• If USD/JPY holds or bounces, we could see a relief bid in these names given how hard they’ve already been hit on BOJ headlines.

6.4 Domestic demand, retailers and services

• AP and Japanese media flagged that household spending fell about 3% y/y in October, the sharpest drop since early 2024, fuelling concern about the strength of domestic consumption. ^[27]
• GDP details on private consumption and real wage trends will be watched closely: any upward revision could support domestic‑demand names (retail, travel, leisure), especially if a stronger yen reduces imported inflation. ^[28]

7. Technicals and Valuations: Still an Uptrend, but Flashing Caution

Current weekend research paints a mixed, but not outright bearish, technical picture for the Nikkei 225.

Key levels

• A composite of technical notes summarised in TS2.Tech’s weekly outlook points to:
  • Support in the high‑49,000s (roughly 49,000–49,100) for Nikkei futures,
  • Resistance around the 51,000–52,600 region, where the index stalled at recent record highs. TechStock²+1
• The index is still described as above its 50‑ and 100‑day moving averages, suggesting that the medium‑term uptrend is intact, even after a roughly 6% pullback from the highs. TechStock²

Technical services and “hold” signals

• A widely used algorithmic service (StockInvest) notes that the Nikkei 225 “holds several positive signals” but is best treated as a hold/accumulate rather than an outright buy or sell at current levels, reflecting the tug‑of‑war between strong price momentum and macro uncertainty. ^[29]

Valuations

• TS2’s summary of MacroMicro data puts the forward P/E for the Nikkei 225 around 22–23x, above Japan’s historical averages but broadly in line with other AI‑heavy markets and still cheaper than the most richly valued U.S. mega‑cap indices. TechStock²+1
• Structural factors – corporate governance reforms, rising shareholder returns, and gradual exit from ultra‑easy policy – are cited as reasons many strategists still justify a valuation premium for Japan versus its own past. TechStock²+1

For Monday, technicians will mostly be asking:

• Does the 49,000–50,000 support zone hold if GDP disappoints?
• Or does a “Goldilocks” data and FX combination allow the Nikkei to re‑attack the 51,000 region quickly?

8. Three Market Scenarios for Monday’s Session

Synthesising this week’s research (especially from December 5–7), here are three realistic scenarios for how Monday might play out. These are not trading recommendations, just a distillation of what current commentary is discussing.

Scenario 1 – Base case: Choppy consolidation around 50,000

What happens

• Final Q3 GDP lands close to consensus (slightly weaker but not disastrous).
• USD/JPY is volatile but remains broadly in the mid‑150s, with no dramatic break lower.
• Wall Street futures stay steady ahead of the Fed meeting.

Market reaction

• The Nikkei trades in a wide intraday range, staying roughly between 49,800 and 50,800.
• AI and big tech provide support on dips, financials are mixed, and exporters underperform slightly but avoid panic selling.
• Turnover is solid but not extreme as investors wait for clearer signals from the Fed and BOJ.

Scenario 2 – Bullish surprise: “Not as bad as feared”

What happens

• GDP is revised less negative than expected or shows stronger consumption/capex than feared. ^[30]
• U.S. futures are firm, with markets leaning toward a clean Fed cut and a relatively dovish message. ^[31]
• USD/JPY stabilises or even weakens slightly in favour of the dollar, easing pressure on exporters.

Market reaction

• The Nikkei retests the 51,000 region, with banks, cyclicals and domestically oriented stocks joining AI and chips in the advance.
• Sector rotation into value and financials accelerates as investors gain confidence that Japan can weather higher rates.
• Volatility stays elevated but with a positive skew – dips are bought quickly.

Scenario 3 – Bearish shock: Growth scare and yen spike

What happens

• GDP is revised sharply lower, suggesting a deeper contraction and raising fears that BOJ tightening could be a policy error.
• Traders still see a December BOJ hike as likely, but start questioning the wisdom of further moves in 2026. ^[32]
• USD/JPY breaks decisively lower toward 150, reflecting expectations of a more aggressive policy convergence between BOJ and Fed.

Market reaction

• The Nikkei tests the high‑49,000 support band or briefly dips below it, with autos, exporters and leveraged growth names taking the brunt of the selling.
• Domestic demand names may not offer much shelter if investors interpret the GDP miss as a sign of broader weakness in household spending.
• Volatility spikes and trading desks focus on how much BOJ expectations need to be repriced before the December meeting.

9. Bottom Line: Monday Is About Data, Not Decisive Policy – Yet

Putting it all together:

• Final Q3 GDP at 8:50 a.m. JST is the first hurdle for Monday’s Tokyo session.
• Under the surface, BOJ hike bets (to 0.75%), a deeply split Fed poised to cut, a firmer yen and near‑2% JGB yields form a complex backdrop that will continue to drive sector‑by‑sector divergences. ^[33]
• The medium‑term uptrend in the Nikkei remains intact, but with valuations elevated and policy risk high, the market is likely to reward companies and sectors that can grow earnings even in a higher‑rate, slower‑growth environment.

For traders and investors watching the Tokyo stock market on Monday, the practical checklist is:

1. 8:50 a.m. JST – Japan Q3 GDP (final)
2. Early Tokyo trade – USD/JPY and 10‑year JGB reaction
3. Sector breadth – Do banks, cyclicals and domestics participate, or does AI/tech carry the load again?
4. Overnight – Fed commentary and U.S. futures ahead of the December 9–10 FOMC meeting

As always, this preview is for information and news purposes only and does not constitute investment advice. Anyone considering trading around Monday’s open should factor in their own risk tolerance, time horizon and, ideally, independent professional advice.

References

1. m.economictimes.com, 2. www.nippon.com, 3. www.nippon.com, 4. www.investing.com, 5. www.nampa.org, 6. m.economictimes.com, 7. m.economictimes.com, 8. www.esri.cao.go.jp, 9. www.investing.com, 10. www.reuters.com, 11. www.tradingview.com, 12. www.fxempire.com, 13. www.reuters.com, 14. www.reuters.com, 15. www.reuters.com, 16. www.reuters.com, 17. in.investing.com, 18. www.reuters.com, 19. www.fxempire.com, 20. www.reuters.com, 21. www.reuters.com, 22. www.fxempire.com, 23. www.fxempire.com, 24. www.reuters.com, 25. www.nampa.org, 26. www.nippon.com, 27. www.ksat.com, 28. www.tradingview.com, 29. stockinvest.us, 30. www.tradingview.com, 31. www.reuters.com, 32. www.reuters.com, 33. www.reuters.com