Japan’s Nikkei share average fell for a fifth straight session as global trade frictions dampened risk sentiment, while government bonds rebounded after a sharp drop the previous day. Prime Minister Sanae Takaichi’s call for a snap election on Monday heightened concerns over the nation’s fragile finances.
On January 21, 2026, Tokyo’s stock market saw the Nikkei share average decline 0.45% to 52,751.16, narrowing losses after an initial drop of up to 1.5% in early trading. The broader Topix index slipped 0.88% to 3,593.85.
The previous session had witnessed a broader sell-off, with stocks falling alongside a plunge in the yen and bond prices, pushing yields to record highs. This followed Prime Minister Sanae Takaichi’s announcement on Monday of a snap election, where she pledged to suspend an 8% food levy for two years, mirroring rival parties and raising alarms about the strain on Japan’s already precarious public finances.
“Today, investors are probing the market with small buys after the sharp declines of the Nikkei. The market wanted to defend the psychological line of 52,000,” said Kazuaki Shimada, chief strategist at IwaiCosmo Securities.
Semiconductor-related shares provided support, with chip-testing equipment maker Advantest rising 1.23% and chip-making equipment maker Tokyo Electron up 0.56%. “The declines in yields on the Japanese government bonds also eased sentiment,” Shimada added. The 20-year JGB yield fell 4.5 basis points to 3.3%, while the 30-year yield dropped 8 basis points to 3.795%.
Overnight, U.S. equities closed lower, marking their largest one-day drops in three months amid fears that President Donald Trump’s fresh tariff threats against Europe could reignite market volatility. Financial stocks bore the brunt, with brokerage and banking sectors each losing more than 2%, the worst performers. Mitsubishi UFJ Financial Group and Sumitomo Mitsui Financial Group each fell over 2%.
These developments underscore how global trade tensions and domestic political uncertainty are pressuring Japan’s markets.
