Japan’s Stock Market Sees Strongest New-Year Rally in Decades Amid Foreign and Retail Investment Surge
Japan's Nikkei and Topix indices have delivered their strongest new-year rally in nearly four decades, fueled by a confluence of foreign capital inflows and renewed interest from local investors. Retail traders topped up tax-free NISA accounts as annual limits reset, while brokers reported unusually aggressive early buying.
The rally stems from multiple catalysts: global anticipation of interest rate cuts, improving corporate earnings outlooks, governance reforms, and fiscal support from Prime Minister Sanae Takaichi's administration. Rakuten Securities analyst Masayuki Doshida notes current prices already reflect earnings expectations, but upside surprises could propel the Nikkei 225 beyond 55,000.
Market liquidity remained steady despite simultaneous participation from retail investors, foreign institutions, and algorithmic funds—a rare convergence that suggests sustainable momentum. Meanwhile, Japan's bond market faced turbulence as 10-year yields spiked following a government auction, reflecting renewed inflation concerns.
