Japanese equities soared to a historic peak on Friday, with the broad Topix index touching a record intraday high. The surge was fueled by receding investor anxiety over the nation's debt, following the cabinet's approval of a record budget for the upcoming fiscal year.
Markets Rally on Fiscal Clarity
In early trading, the Topix index advanced by 0.5%, reaching an unprecedented level of 3,436.75. The benchmark Nikkei 225 index also climbed 0.9% to 50,865.30, positioning itself for an impressive 26% annual gain for the year. With only three trading days left in 2025, market participants are now keenly watching to see if the Nikkei can close above the psychologically significant 51,000 mark.
Budget and Bond Yields Provide Tailwind
The bullish sentiment was primarily driven by the government's latest fiscal plans. The cabinet approved a record budget aimed at balancing proactive economic stimulus with long-term debt management. This move helped calm markets, leading to a slight gain in benchmark Japanese government bonds (JGBs). Yields retreated from a 26-year peak after Prime Minister Sanae Takaichi sought to reassure investors about her large-scale stimulus package.
Further supporting the bond market, a Reuters report indicated the government is likely to reduce new issuance of super-long-term bonds in the next fiscal year. "This downward movement in interest rates may also be contributing positively to the Japanese stock market," noted Maki Sawada, a equities strategist at Nomura Securities.
Stock Movers: Winners and Losers
The market breadth was positive, with 165 stocks advancing on the Nikkei against 58 decliners. Leading the charge were major technology and consumer giants.
The top gainers included:
- SoftBank Group, the prominent artificial intelligence investor, which rose by 2.5%.
- Fast Retailing, the operator of the Uniqlo chain, gaining 2.3%.
- Nintendo, the iconic game maker, which also climbed 2.3%.
On the losing side, Tokyo Electric Power Company (TEPCO) fell by 1.8%, while Sumitomo Electric Industries declined by 1.1%.
The day's trading underscores how clarity on government spending and debt management can directly fuel investor confidence, propelling key indices to new heights as the year draws to a close.
