Japanese Stocks Storm to Record as Big GDP Beat Boosts Megacaps

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Japanese Stocks Storm to Record as Big GDP Beat Boosts Megacaps.

stock :: 2025-08-15 :: source - bloomberg

By Hideyuki Sano and Momoka Yokoyama

(Bloomberg) — Japanese equity benchmarks closed at a record high for a third time this week on faster-than-expected economic expansion, with financial shares leading gains on renewed expectations of a Bank of Japan rate hike.

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The Topix Index rose 1.6% to an all-time high of 3,107.68, with a sub-index of banks surging 9.4% this week in the biggest rally since the rebound from the market crash in August last year. The tech-heavy Nikkei (^N225) climbed 1.7% as Masayoshi Son’s SoftBank Group Corp. (9984.T) vaulted 6.4% on hopes of gains on the firm’s AI investment.

A heavy concentration of buying in firms with the large market capitalizations pointed to revived interest from foreign investors after Japan’s gross domestic product grew at an annualized pace of 1% in April-June from the prior quarter, more than twice forecasts. The market now sees a greater chance of a BOJ hike in coming months, which supported the yen and underpinned gains in equities.

“With capital spending and consumption beating expectations, the GDP figures will heighten hopes that the Japanese economy will have a more solid footing,” said Yugo Tsuboi, chief strategist at Daiwa Securities Co. He sees the Nikkei consolidating gains for now, with the next leg-up likely in mid-September when the Federal Reserve is expected to lower rates.

The yen strengthened about 0.5% to 146.95 against the dollar this week and the 10-year Japanese government bond yield rose 7.5 basis points to 1.56%.

Read: Japanese Bank Shares Jump as GDP Boosts Speculation of Rate Hike

On top of robust GDP readings, comments late on Wednesday from US Treasury Secretary Scott Bessent that Japan has been behind the curve in taming inflation helped to stoke speculation of an early rate increase by the BOJ. Expectations of a hike by October rose to 49%, from 39% at the start of the week, according to interest-rate swaps.

Buying of large caps showed that foreign investors were ramping up interest, some strategists said. The Topix Core 30 index of the country’s largest caps jumped 2.6% Friday while the Topix Small index eked out gains of 0.2%.

Despite the hefty rise in the Topix, the number of advancing shares was unusually low, with only 52% of stocks in the gauge in the black.

That suggests “it is foreign investors scratching up large caps because somehow they decided to increase exposure to Japan,” said Yusuke Sakai, a senior trader at T&D Asset Management Co.

The buying likely reflected fund flows out of US stocks to other markets including Japan as the increasing prospects of Fed rate cuts raises expectations the dollar will weaken, said Tomo Kinoshita, global market strategist at Invesco Asset Management Co.

—With assistance from Kentaro Tsutsumi.