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Japan's Nikkei gains 2% as AI rally lifts yen and bonds

Japan's Nikkei gains 2% as AI rally lifts yen and bonds
Japan's Nikkei gains 2% as AI rally lifts yen and bonds

The Nikkei index rose on Friday due to a rally of AI-related stocks. Also, the currency and bond markets in Japan advanced as a result of a possible reorientation in the investment strategies by Japan's large pension funds.

The benchmark Nikkei 225 rose by 2% to 69,121.02 while the Topix grew by 0.76%, reaching 4,050.82.

The yield on Japan’s 10-year government bonds fell by 10 basis points to 2.775%. This is a decline from the three-decade high. The yen gained 0.43% versus the dollar to 161.69.

Wall Street tech shares soared after Micron Technology announced plans to invest over $250 billion in the U.S.A. through 2035.

Shuutarou Yasuda is a market analyst with Tokai Tokyo Intelligence Laboratory. He said that Japanese stocks were influenced by the overnight rally in U.S. tech stocks. The market became optimistic about the U.S.-Iran peace talks and oil prices dropped.

The Nikkei gained the most thanks to chip-related stocks, with Sumco soaring 15.40% and Advantest gaining 8.54%. SoftBank Group, an investment conglomerate in the tech sector, rose 11.33%.

The rise in bond prices and currency follows comments made by Finance Minister Satsuki Catayama, who said on Thursday that the Government would investigate measures to encourage pension funds to increase their investments in domestic financial assets.

Bonds and the yen both experienced a boost in sentiment as the prospect of Japan's biggest pension investors investing more money into local markets was raised.

"Katayama’s remarks helped reverse the?selling trends of Japanese government bonds and the yen," Masahito. Sugawara said, a senior analyst at Daiwa Securities. "Now, half of the assets held by Japanese pension funds is invested in foreign assets. The market bet that a possible change in asset allocation would favor Japanese assets.

Fast Retailing?fell 4.23% in a single day, its steepest drop since November 2025. Tokio marine Holdings lost 3.02%.

The Nikkei225 saw 116 stocks advance against 107 declining ones, while two stocks remained unchanged.

(source: Reuters)