FX.co ★ Cautious Start for Japan Stocks in Final Week of 2025

On Monday morning, the Nikkei 225 experienced a decline, dropping 121 points, or 0.2%, to settle at 50,571, undoing gains made in the previous session as selling pressure impacted consumer durables, electronic technology, and services stocks. Meanwhile, the Topix index remained relatively stable, hovering around 3,426 following a slight early rise. As investors commenced the final trading week of the year, a cautious mood prevailed, influenced by the Bank of Japan's December meeting summary, which indicated that multiple board members advocated for further interest rate hikes. Weak economic indicators from November added to the strain, including a sharper-than-anticipated decrease in Japan's industrial output, declining retail sales, and an unemployment rate persisting at its highest level since July 2024. Nevertheless, firming U.S. futures helped limit losses after the S&P 500 closed at an all-time high on Friday, posting weekly gains. In parallel, Japan's cabinet approved a record fiscal year 2026 budget last week, set to be presented to the Diet in January. Among the early stocks facing downward pressure were Kioxia, which fell by 2.3%, Otsuka by 1.6%, Kao by 1.3%, and TDK by 1.0%.