Japan’s Nikkei 225 index experienced a robust start to 2026, climbing 2.97% to close at 51,865, driven by significant gains in chip and defense stocks. Markets appeared to shrug off recent geopolitical tensions, focusing instead on domestic corporate developments and upcoming economic data from the United States.
The index’s performance was notably boosted by Tokyo Electric Power Company (TEPCO), whose shares soared 9.23% following an announcement regarding the planned restart of a reactor at the Kashiwazaki-Kariwa nuclear power station. This facility, the world’s largest by capacity, has remained largely inactive since the Fukushima disaster in 2011. The anticipated restart, slated for January 20, 2026, with full commercial operations expected by February 26, is projected to add approximately ¥100 billion annually to TEPCO’s earnings.
Chip-related and defense stocks also contributed significantly to the Nikkei’s upward trajectory. Shares of Tokyo Electron and Advantest both rose by over 6%, reflecting investor confidence in Japan’s technology sector. Heavy-industry firms involved in defense, such as IHI, Mitsubishi Heavy Industries, and Kawasaki Heavy Industries, saw even more substantial gains, ranging from 7.9% to 8.99%. This rally suggests a positive outlook for these sectors, particularly amid ongoing global geopolitical uncertainties.
Currency markets reflected a similar risk-on sentiment, with the U.S. dollar strengthening against the Japanese yen. The dollar reached a two-week high of 157.295 yen as traders turned their attention to upcoming U.S. economic indicators, including the ISM Manufacturing PMI and the non-farm payrolls report. Anticipation surrounding these data releases contributed to the dollar’s strength.
Despite recent U.S. actions in Venezuela, the Japanese markets displayed resilience. This suggests that markets are currently prioritizing domestic corporate news and forthcoming U.S. economic data over international geopolitical events. This focus indicates a prevailing optimism about Japan’s economic prospects and a belief in the stability of global markets.
The strong performance of the Nikkei 225 at the start of 2026 underscores the importance of corporate developments, particularly TEPCO’s reactor restart plans, and the strength of the technology and defense sectors. The market’s ability to look past international geopolitical events further reinforces investor confidence in Japan’s economic trajectory, suggesting a potentially positive outlook for the coming year.
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