Japan's Nikkei share index slid for a fourth straight session as domestic fiscal concerns pushed bond yields to record highs, while U.S.-Europe trade tensions over Greenland weighed on market sentiment.
On January 20, 2026, in Tokyo, Japan's benchmark Nikkei 225 index (.N225) fell 0.8% to 53,172.16 in early trading, marking the longest sell-off in two months. The broader Topix index (.TOPX) declined 0.6% to 3,634.19.
The drop came after Japanese Prime Minister Sanae Takaichi officially called for a snap lower house election on February 8 and pledged to suspend the sales tax on food, which drove government bond yields to all-time highs. Meanwhile, U.S. markets were closed for a holiday, but European shares slumped overnight following threats by U.S. President Donald Trump to impose additional tariffs on eight European countries unless the U.S. is allowed to buy Greenland.
"Rising interest rates are likely acting as a drag on the stock market," said Maki Sawada, an equities strategist at Nomura Securities. On Trump's tariff threats, she added, "[They] weighed on European stocks, and it appears that this trend is spreading to Japan’s stock market as well."
Nomura expects stocks to rally if Takaichi's Liberal Democratic Party secures a large majority in the lower house, fall if it loses power, and trade flat if it narrowly retains a majority. On the Nikkei, there were 73 advancers against 150 decliners. The biggest losers included Fuji Electric (6504.T), down 5.3%, and Recruit Holdings (6098.T), which sank 4.8%. The top gainers were Furukawa Electric (5801.T), up 6%, and Nichirei (2871.T), which rose 4.2%.