Tokyo Stocks: Nikkei 225 and TOPIX Daily — 2026-10-26
The Nikkei 225 has experienced volatile trading this week, with a sharp intraday plunge on October 19 followed by a partial recovery, leaving the index in a holding pattern ahead of the Bank of Japan’s upcoming policy meeting. Foreign investors turned net sellers for the first time in three weeks, offloading ¥365.4 billion in equities amid rising bond yields and AI funding concerns that dragged semiconductor stocks lower.
Tokyo Stocks: Nikkei 225 and TOPIX Daily — 2026-10-26
Foreign Investors Turn Net Sellers for First Time in Three Weeks
Data from the Japan Exchange Group (JPX) for the week of October 13–16 revealed that foreign investors sold a net ¥365.4 billion in Japanese equities, marking the first weekly net sell in three weeks. This shift in flow occurred as global tech valuations came under pressure, with overseas investors dumping cash equities while simultaneously engaging in record futures selling to hedge against potential downside. This reversal in foreign flows is a critical signal for Tokyo traders, as it suggests a loss of conviction in the current rally despite domestic institutional support.
Intraday Plunge and Partial Recovery on AI Funding Fears
On October 19, the Nikkei 225 initially dropped more than 1,400 points at the open, briefly falling below the psychological ¥64,000 line, before recovering to close down 0.62% at ¥64,916.70. The broader TOPIX index managed to rise into positive territory during this session, aided by gains in domestic banks and utilities. However, the market faced renewed pressure on October 20, when SoftBank Group slid 6% amid rising bond yields and doubts over AI financing, pulling the Nikkei down to ¥64,075.37.
Semiconductor Sector Drags Index Lower Amid Global Tech Meltdown
The semiconductor sector remained a primary drag on the index throughout the week, with the Nikkei closing at ¥62,693.16 on October 23, down 214.68 points from the previous day. This decline was driven by a global tech valuation meltdown, exacerbated by reports of negative free cash flow at major U.S. tech firms, which raised concerns about the sustainability of AI infrastructure spending. Tokyo Electron and Screen Holdings led the losses in the sector, reflecting broader anxieties about the cost of capital in the AI era.
Yen Stabilizes Near ¥156 Ahead of BoJ Meeting
The yen traded in the late ¥156 range against the dollar on the morning of October 26, showing slight strength against the dollar but weakness against the euro. This stability is occurring as the market enters a holding pattern ahead of the Bank of Japan’s policy meeting, where investors are closely watching for any signals regarding the timing of the next rate hike. The 10-year JGB yield has remained elevated at 2.81%, reflecting persistent inflation concerns and expectations of a higher yield range in the coming quarters.
Local view
Japanese media outlets are focusing heavily on the "nervous" price action in Tokyo, with Nikkei describing the market as "crossing" (sōgō) with volatile movements as traders await the BoJ decision. Fisco and Investing.com Japan highlighted the resilience of the broader TOPIX index despite the Nikkei's struggles with tech-heavy constituents. Kabutan noted that the afternoon session saw the Nikkei "holding back" (sageshiboru) from further declines, suggesting domestic bargain hunting at lower levels.
Context & numbers
- Nikkei 225 Close (Oct 23): ¥62,693.16 (Down 214.68 points / 0.3%)
- Nikkei 225 Close (Oct 19): ¥64,916.70 (Down 0.62%)
- Foreign Investor Flow (Oct 13-16): Net Sell of ¥365.4 billion
- 10-Year JGB Yield (Oct 26): 2.81%
- USD/JPY Rate (Oct 26 AM): Late ¥156 range
- Trade Deficit (Oct 21): $3.39 billion, nearly tripling forecasts
On the radar
- Bank of Japan Policy Meeting: Investors are awaiting the outcome of the upcoming BoJ meeting to determine if a rate hike will occur this quarter, which is the primary driver for yen volatility.
- Semiconductor Earnings: Key earnings reports from Kioxia and Advantest are due, with local analysts watching these closely for guidance on AI demand and capital expenditure sustainability.
- TOPIX Revamp Impact: The Tokyo Stock Exchange's ongoing governance reforms continue to influence stock selection, with hundreds of companies potentially facing removal from the TOPIX index under tighter inclusion rules.
This content was collected, curated, and summarized entirely by AI — including how and what to gather. It may contain inaccuracies. Crew does not guarantee the accuracy of any information presented here. Always verify facts on your own before acting on them. Crew assumes no legal liability for any consequences arising from reliance on this content.
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