Japan’s Nikkei 225 index began 2026 on a high note, increasing by 2.97% and closing at 51,865. This surge was predominantly fueled by a rise in chip and defense stocks. Despite recent geopolitical challenges, the market concentrated on local corporate updates and forthcoming economic indicators from the United States.
Nikkei 225 Performance Driven by Key Stocks
The notable growth in the Nikkei can be largely attributed to Tokyo Electric Power Company (TEPCO). Shares of TEPCO jumped by 9.23% after the announcement of the planned restart of a reactor at the Kashiwazaki-Kariwa nuclear power station. This facility, recognized as the world’s largest by capacity, had been largely inactive since the Fukushima disaster in 2011. The restart is scheduled for January 20, 2026, with full commercial operations expected to commence by February 26. Analysts predict this development will boost TEPCO’s annual earnings by approximately ¥100 billion.
Chip and Defense Stocks Rally
- Tokyo Electron and Advantest both saw their shares rise by over 6%, indicating strong investor confidence in Japan’s technology sector.
- Heavy industry firms in defense also posted substantial gains, with companies such as IHI, Mitsubishi Heavy Industries, and Kawasaki Heavy Industries witnessing increases between 7.9% and 8.99%.
This robust performance from chip-related and defense stocks highlights a positive outlook for these sectors amidst persistent global geopolitical uncertainties.
Currency Markets Reflect Optimism
In tandem with stock market movements, currency markets displayed a similar risk-on sentiment. The U.S. dollar strengthened against the Japanese yen, hitting a two-week high at 157.295 yen. Traders are closely monitoring upcoming U.S. economic indicators, including the ISM Manufacturing PMI and the non-farm payrolls report, contributing to the dollar’s recent strength.
Market Resilience Amid Global Tensions
Despite recent geopolitical actions involving the U.S. in Venezuela, Japanese markets demonstrated notable resilience. This suggests that investors are prioritizing domestic developments and upcoming economic data over international events. The positive start to 2026 for the Nikkei 225 underscores the significance of corporate news, particularly TEPCO’s reactor plans, and the strength of the technology and defense sectors.
The market’s ability to focus on internal developments highlights investor confidence in Japan’s economic trajectory, pointing to a potentially positive outlook for the year ahead.
