Japan's TOPIX Index surpasses August 18 peak, reaching a record high of 3,125 points with an intraday gain of 0.7%.

Japan's TOPIX Index surpasses August 18 peak, reaching a record high of 3,125 points with an intraday gain of 0.7%.

Title: Japan's TOPIX Index Surpasses August 18 Peak, Reaches Record High

Japan's TOPIX Index has reached a new record high, surpassing its August 18 peak by 3,125 points. The index closed on September 2, 2025, with an intraday gain of 0.7%, marking a significant milestone for the Japanese stock market. This rally was driven by multiple factors, including renewed foreign investment, expectations of U.S. rate cuts, and strong domestic economic growth [1].

The surge in the TOPIX Index comes after a week of substantial foreign investment, with foreign investors pouring 1.16 trillion yen ($7.87 billion) into Japanese stocks, marking the largest weekly foreign investment since April 5 [1]. This influx of capital has contributed to a significant market rally, propelled by expectations of U.S. rate cuts and positive economic data from Japan [1]. The Nikkei 225 Index, a key benchmark for the Japanese stock market, gained 3.73% during the week of August 16, reaching an all-time high of 43,876.42 [1].

The recent market activity has been influenced by the resignation of Prime Minister Shigeru Ishiba, which has added volatility to the Japanese bond market and stocks [2]. The resignation of Ishiba, known for his conservative fiscal stance, has led to concerns about the potential return to "Abenomics" policies, which could increase government spending and fiscal stimulus [2]. This has resulted in a bear-steepening of JGBs (Japanese government bonds) and a weakening of the yen, but it has also led to a temporary rebound in stock prices as investors anticipate potential reflationary policies [2].

The rebound in Japanese stocks has been particularly strong in sectors like banks and tech, which have been boosted by a pause in the rise of global bond yields and a rebound in U.S. tech stocks [3]. The Topix Index rose 0.8% to 3,073.38, while the Nikkei advanced 1.3% to 42,477.21, with Sony Group Corp. contributing the most to the Topix Index gain [3].

Despite the temporary rebound, market participants remain cautious due to ongoing concerns about the political instability and the potential impact on the Bank of Japan's interest rate normalization [3]. The Bank of Japan is on a gradual path to normalizing interest rates and reducing its holdings of JGBs, but the resignation of Ishiba could potentially disrupt this trajectory [2].

In conclusion, Japan's TOPIX Index has reached a new record high, driven by renewed foreign investment, expectations of U.S. rate cuts, and positive economic data. The market rally has been influenced by the resignation of Prime Minister Shigeru Ishiba, adding volatility to the bond market and stocks. However, the market remains cautious due to ongoing political uncertainties.

References
1. [1] https://scanx.trade/stock-market-news/global/japanese-stocks-surge-as-trump-signs-15-tariff-deal-boosting-auto-sector/18581853
2. [2] https://www.investing.com/news/economy-news/japans-stressed-bond-market-stocks-brace-for-pm-ishiba-exit-reaction-4227951
3. [3] https://www.bloomberg.com/news/articles/2025-09-04/japan-s-stocks-rally-as-mood-lifted-by-bond-market-calm-us-tech