Japan’s Nikkei Stock Average Extends Fall as Rally Loses Steam

Reuters

13:21 JST, January 16, 2026

TOKYO, Jan 16 (Reuters) – Japan’s Nikkei share average slipped for a second consecutive session on Friday, as investors took a breather following a rally that was driven by hopes for expanded fiscal stimulus.

The Nikkei .N225 was down 0.44% at 53,867.19, as of 0200 GMT, while the broader Topix .TOPX slipped 0.28% to 3,658.81.

The Nikkei has risen 3.7% this week and the Topix has added 4%, following a report that Prime Minister Sanae Takaichi might dissolve parliament this month and call for a general election in February. The report was confirmed by the Liberal Democratic Party’s secretary general on Wednesday.

For the month, the Nikkei and the Topix both have gained more than 7%.

“The market needed to pause after the sharp gains this week. Today’s declines are small adjustment to reflect that sentiment… The overall view has not changed,” said Kazunori Tatebe, chief strategist at Daiwa Asset Management.

“The market priced in the best political scenario where the LDP boosts seats at the election and Takaichi gets backing for spending plans that the stock market has high expectations on.”

But there were some uncertainties over the election outcome, such as the discrepancy between the support rate for Takaichi and the LDP, said Tatebe.

On Thursday, the main opposition Constitutional Democratic Party of Japan and Komeito agreed to form a new political party in an attempt to present a united front against the LDP.

Uniqlo owner Fast Retailing 9983.T fell 1.62% to drag down the Nikkei the most. Chip-making equipment maker Tokyo Electron 8035.T slipped 1.17%.

Consulting firm Baycurrent 6532.T fell 8.89% to become the worst percentage loser on the Nikkei.

On the other hand, chip-testing equipment maker Advantest 6857.T edged up 0.67% and air-conditioning maker Daikin Industries 6367.T rose 1.19%.

Of the more than 1,600 stocks trading on the Tokyo Stock Exchange’s prime market, 43% rose, 54% fell and 3% traded flat.