Japan’s Nikkei Stock Average Extends Fall as Rally Loses Steam (UPDATE 1)

Reuters

13:21 JST, January 16, 2026 (updated at 17:20 JST)

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

The Nikkei .N225 slipped 0.32% to 53,936.17, while the broader Topix .TOPX edged down 0.28% to 3,658.68.

The two indexes rose nearly 4% this week following a report over the weekend that Prime Minister Sanae Takaichi might dissolve parliament this month and call for a general election in February. The Liberal Democratic Party’s secretary generalconfirmed the report on Wednesday.

For the month, the Nikkei and the Topix gained more than 7% so far.

“The market needed to pause after the sharp gains this week. Today’s declines are a 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.

Among individual stocks, Uniqlo owner Fast Retailing 9983.T fell 2.12% to drag down the Nikkei the most. Chip-making equipment maker Tokyo Electron 8035.T slipped 1.03%.

Chip-testing equipment maker Advantest 6857.T rose 1.38% and fiber optic cable maker Fujikura 5803.T gained 2.37%.

Consulting firm Baycurrent 6532.T was the worst percentage loser on the Nikkei, falling 8%.

Of the more than 1,600 stocks trading on the Tokyo Stock Exchange’s prime market, 59% rose, 37% fell, and 2% traded flat.