Japanese Shares Mark Record-High Close; Bonds, Yen Drop on Stimulus Speculation

Reuters

16:44 JST, January 14, 2026

TOKYO, Jan 14 (Reuters) – Japanese stocks posted a record-high close on Wednesday, while the yen and bonds extended their declines as markets priced in the possibility of a snap election that could pave the way for expanded fiscal stimulus.

A sharp fall in the yen since last week provided a tailwind for equities, while also fueling bets that the Bank of Japan may have to speed up raising rates to stem further declines in the currency.

The Nikkei .N225 rose 1.48% to 54,341.23, while the broader Topix .TOPX climbed 1.26% to 3,644.16, both notching record closing highs.

The yen JPY= fell to its weakest point in 18 months against the dollar, hovering near a level where the market expects a government intervention.

“A weaker yen has raised speculation that the BOJ will have to raise rates at a faster pace,” said Takashi Fujiwara, chief fund manager at Resona Asset Management’s fixed income investment division.

The so-called Takaichi rally revived on Tuesday following a media report that Prime Minister Sanae Takaichi might dissolve parliament this month and call for a general election in February.

Selloffs in Japanese government bonds (JGBs) extended to a second session across maturities, although bets on the Takaichi administration typically prompt the market to buy shorter-dated bonds as she backs looser monetary policy.

The yield on five-year bonds rose to a record high of 1.615% after a debt auction of the same maturity saw weak demand.

“With the report about a snap election being held next month, the market now expects the BOJ to raise rates as early as April, and there could be more in October and March,” said Resona’s Fujiwara.

The 10-year JGB yield rose 2 bps to 2.185%, the highest since February 1999. Bond prices move inversely to yields.

Shares of chip-testing equipment maker Advantest 6857.T rose 4.89%, while chip-making equipment maker Tokyo Electron 8035.T climbed 3.12%.

Dentsu Group 4324.T tumbled 11.29% after the Financial Times reported that the advertising agency’s plan to sell its international operation was close to collapse.