Japanese Stocks Rise on Tech Gains Amid Higher Yields and Yen Recovery

Tokyo | EcoPulse24

Japan's financial markets posted mixed performance on Thursday, with stocks climbing on tech sector gains and improved global risk appetite, while government bond yields rose amid a reassessment of Bank of Japan (BOJ) monetary policy expectations and a recovering yen as the dollar weakened.

The Nikkei 225 index advanced about 1.9% to close at 55,278 points, while the broader Topix index gained a similar percentage to 3,703 points, recouping some losses from earlier in the week.

This rally was driven by strong gains in technology shares following a recovery in the sector on Wall Street. Fujikura rose about 3.7%, Advantest climbed 4.2%, and SoftBank Group jumped 4.3%.

The financial sector also performed strongly, with major banks including Mitsubishi UFJ Financial, Mizuho Financial, and Sumitomo Mitsui Financial posting gains between 3.4% and 6.4%.

Conversely, Japanese government bond yields rose as demand improved for long-term debt. The 10-year yield increased by about 5 basis points to around 2.15%, while the 30-year yield reached roughly 3.4%, up from a three-month low of 3.25% last month, following a robust long-term bond auction.

On the currency front, the Japanese yen strengthened past 157 per dollar, benefiting from a weaker US dollar and hopes for easing Middle East tensions, despite ongoing military operations involving the US and Iran.

BOJ Governor Kazuo Ueda warned that escalating conflict in the Middle East could significantly impact Japan's economy, indicating that the central bank may need to keep rates unchanged for longer amid global uncertainty.

Board member Ryozo Himino said the BOJ would continue monitoring inflation and financial markets, noting rates could gradually move toward neutral if core inflation accelerates toward the official target.

Finance Minister Satsuki Katayama added that currency intervention remains an option to support the yen, stressing that authorities are closely monitoring currency movements with a strong sense of urgency and in coordination with the US.

EcoPulse24 Analysis

Japanese market movements reflect a delicate balance between improved global risk appetite and persistent geopolitical risks. While the technology sector's recovery supports equities, rising yields and currency volatility indicate investors are still reassessing the BOJ's policy path amid energy-driven inflation and external economic risks.