Key Facts
• On January 7, the Nikkei average fell for the first time in three trading days.
• The index closed down 556.10 points at 51,961.98.
• The Nikkei dropped over 600 points intraday, hitting a low of 51,830.40.
• It opened 373 points lower and extended losses, breaking below the 52,000 psychological level.
• The index had surged 2,178 points over two days, reaching a record closing high the previous day.
• Profit-taking intensified amid concerns over rapid year-start gains.
• China announced an immediate ban on dual-use (military-civilian) exports to Japan, weighing on the market.
• Investors await details on banned items, causing cautious trading.
• Small-cap stocks related to domestic rare earth development, like Daiichi Rare Earth Chemical and Toyo Engineering, saw buying interest.
• Senior analyst Mutsumi Kagawa noted that despite positive outlooks, tensions in Japan-China relations triggered selling.
• Major stocks Advantest and Fast Retailing fell over 4% and 2%, respectively, dragging the Nikkei down by about 403 points.
• Tokyo Electric Power Holdings and Sapporo Holdings each dropped over 7%.
• Conversely, Tokyo Electron and Recruit Holdings rose 2-3%, while Takashimaya surged over 9% after announcing bond buybacks.
• Kioxia Holdings gained over 9% on memory demand expectations; Ebara Corporation rose over 6%.
• TOPIX closed down 0.77% at 3,511.34.
• The Tokyo Stock Exchange Prime Market Index fell 0.77% to 1,808.67.
• Prime market trading value was 6.41665 trillion yen.
• Among 33 TSE sectors, 24 declined including mining and electric/gas; 9 sectors rose including precision instruments and pharmaceuticals.
• The TSE Growth Market 250 Index rose 0.23% to 692.26.
• Prime market had 885 advancing stocks (55%), 666 declining (41%), and 53 unchanged (3%).
Summary
The Nikkei average reversed gains on January 7, falling 556.10 points to 51,961.98 after a rapid two-day surge that pushed it to a record high. Profit-taking dominated amid concerns over the sharp rise and escalating tensions between Japan and China, highlighted by China’s immediate ban on dual-use exports to Japan. This geopolitical development added pressure on the market, causing cautious investor behavior. While major stocks such as Advantest and Fast Retailing declined significantly, some mid and small-cap stocks linked to domestic rare earth development attracted buying interest. The TOPIX and Tokyo Stock Exchange Prime Market Index also declined, with broad sector weakness in mining and energy-related industries. Meanwhile, the Growth Market showed modest gains. Overall, the market reflected a balance between profit-taking and selective buying amid geopolitical uncertainty and supply-demand adjustments.
