TOKYO - Tokyo stocks rose strongly on September 25, with the Nikkei 225 closing at 66,364, up 850 points, as buying in semiconductor and artificial intelligence-related shares combined with demand for dividend-paying financial stocks ahead of the September 28 interim dividend deadline.
The broader TOPIX also advanced, rising 53.29 points to 4,128.59, showing a much broader rally than the previous day, when the Nikkei had risen but TOPIX lagged. The improvement in TOPIX suggested that investors were no longer buying only a narrow group of high-priced technology shares, but were also returning to banks, securities firms, insurers, other financials and selected domestic shares.
The Nikkei rose for a fifth straight session, extending its recovery from the mid-September selloff and moving firmly above the 66,000 level. The index had opened at 65,640, up 125 points, then gained momentum through the morning as chip-related shares and banks attracted buying.
By the midday break, the Nikkei was up 804 points at 66,318, and it remained strong in the afternoon. At 2 p.m., the index was up 829 points at 66,343, before closing slightly higher at 66,364.
The September 25 rally was notable because it followed a day when U.S. semiconductor shares had not provided a clear tailwind. The Philadelphia Semiconductor Index fell in the previous U.S. session, but Japanese investors still bought domestic chip-related shares, suggesting that local positioning, the weak yen and dividend demand were more important than the overnight U.S. lead.
Tokyo Electron was the biggest single contributor to the Nikkei’s gain. At 2 p.m., the chip-equipment maker was adding about 220 points to the index by itself, showing how much the headline benchmark depended on heavyweight semiconductor shares.
Advantest was the next major positive contributor, adding about 188 points to the index around the same time. The chip-testing equipment maker remains one of Japan’s most direct beneficiaries of demand for advanced AI processors and high-performance computing.
Ibiden, Fast Retailing, Recruit Holdings, Kioxia Holdings and Kyocera were also among the major contributors to the Nikkei’s rise. The list showed that the rally was centered on AI, semiconductors, high-priced index names and selected technology-linked companies.
Kioxia’s gain was important because the memory-chip maker has become a key gauge of confidence in high-bandwidth memory, AI servers and data-center storage demand. Its shares have been volatile since July, but buying on September 25 suggested that investors were again willing to take exposure to the memory side of the AI cycle.
Ibiden also drew strong buying. The company is tied to advanced chip substrates and packaging, making it a major beneficiary of AI-related semiconductor investment.
Murata Manufacturing, TDK, Taiyo Yuden, Lasertec, Screen Holdings, Fujikura, Sony Group and Komatsu were also reported higher during the session. These names represent electronic components, chip equipment, optical networks, industrial machinery and global manufacturing demand.
Fujikura remained an important second-wave AI infrastructure name because of its exposure to optical fiber, cables and high-speed communications used in data centers. Furukawa Electric and Sumitomo Electric also remain closely watched as investors look beyond chips to the physical infrastructure required for AI expansion.
SoftBank Group was one of the few major AI-linked names that did not fully participate in the rally. The stock was pressured by concern over delays in Oracle data-center power supply projects, even as SoftBank’s broader AI strategy remained in focus.
SoftBank remains Tokyo’s most visible proxy for global AI investment because of its exposure to OpenAI, Arm, robotics, digital infrastructure and other technology platforms. Its weakness on a strong day for the Nikkei showed that investors are now being more selective within the AI trade.
The market is no longer treating every AI-related stock as an automatic buy. Investors are separating chip equipment, memory, components, optical fiber, platforms and software according to earnings visibility, valuation, funding needs and exposure to possible bottlenecks such as power supply.
That selectivity also reflects the wider debate over artificial intelligence development. Safety concerns, regulation, data-center energy needs and funding costs remain risks, even as demand for chips, memory, networks and data infrastructure continues to support Japanese suppliers.
The bank sector was another major driver of the rally. Reuters reported that bank shares were the best performers among the Tokyo Stock Exchange’s 33 industry groups, rising 3.23%. Mitsubishi UFJ Financial Group, Sumitomo Mitsui Financial Group, Mizuho Financial Group, Resona Holdings and regional banks were widely bought.
The buying reflected two forces. The first was the dividend calendar, with September 28 marking the final trading day to qualify for interim dividends for many March-year-end companies. Banks often attract buying during dividend seasons because of their relatively high payouts.
The second was the interest-rate outlook. The Bank of Japan raised its policy rate to 1.25% on September 18, and although the decision was interpreted as less hawkish than feared, investors still expect Japanese rates to remain on a gradual upward path.
Higher rates can improve bank lending margins and investment income. They can also support insurers, securities firms and other financials. On September 25, the sector rotation into financial shares helped TOPIX catch up with the Nikkei after lagging the AI-led rally earlier in the week.
Securities and commodity futures shares, other financials, electrical machinery, precision instruments and services followed banks among the strongest industry groups. That sector mix showed a combination of higher-rate buying, technology demand and broader risk appetite.
The return of financial buying was important for the market’s breadth. A rally led only by Tokyo Electron, Advantest and SoftBank can lift the Nikkei quickly but leave the broader market fragile. On September 25, the combination of chip shares and banks created a more balanced advance.
Prime Market breadth was positive during the morning, with Reuters reporting that 1,069 stocks rose, 425 fell and 58 were unchanged by the midday break. That was a clear improvement from the narrower AI-led sessions earlier in the week.
Dividend buying also helped value and income shares. With the interim dividend deadline approaching, investors sought stocks with stable payouts, particularly financials and other large-cap dividend names.
The yen remained a major support for exporters. The dollar traded around the 158-yen range, weaker for the Japanese currency than earlier in September. Fisco said the dollar was around 158.70 yen in the morning, about 40 sen weaker for the yen than the previous day’s Tokyo close.
A weaker yen raises the yen value of overseas earnings and supports exporters such as automakers, machinery makers, electronics companies and precision-equipment manufacturers. It was one reason investors were willing to buy Japanese shares even after mixed U.S. market signals.
However, yen weakness remains a double-edged force. It supports exporters and the Nikkei, but it raises import costs for energy, food, raw materials and consumer goods. That keeps pressure on households and import-dependent companies.
The BOJ’s September 18 rate hike has not yet stabilized the yen. The central bank raised its policy rate from 1% to 1.25%, the highest level in 31 years, but the decision included two dissenting votes and lacked a forcefully hawkish message, allowing the yen to weaken again.
The market now wants to know whether the BOJ will raise rates again in December or wait until 2027. A faster tightening path would support the yen but could pressure stocks and bonds. A slower path would help equities in the short term but could revive imported inflation and intervention concerns.
Finance Minister Satsuki Katayama said September 25 that U.S. President Donald Trump expressed concern about yen weakness during a Japan-U.S. summit held on September 22, according to Nomura’s market summary. That kept currency policy in focus as the dollar-yen rate hovered near levels that have previously drawn official attention.
Japanese authorities have repeatedly said they are watching excessive currency moves rather than targeting a particular level. Still, the market remains alert to intervention risk if the yen moves quickly toward 160.
The 25-day moving average also supported sentiment. Fisco said some market participants saw the Nikkei’s move above the 25-day line, located around the 65,300 range, as a sign that the market had returned to an upward trend.
The Nikkei had briefly struggled around the mid-65,000 range earlier in the week, but the September 25 close above 66,000 strengthened the short-term technical picture. The next test is whether the index can hold that level after the dividend deadline and after any profit-taking in chip shares.
The 66,000 area now becomes an important support and resistance zone. A sustained move above it would suggest that the AI-led recovery has broadened into a more durable advance. A quick reversal would suggest that the rally was driven mainly by dividend demand and short-term futures buying.
Japanese government bond yields remained important for equity investors. The BOJ’s rate hike has shifted the domestic market into a new environment, with short- and long-term yields much higher than in the ultra-low-rate years.
Higher yields support financial shares, but they also raise borrowing costs for households, companies and the government. They can pressure high-valuation growth shares by raising the discount rate applied to future earnings.
The 10-year JGB yield recently moved above 3% for the first time since 1996, while super-long yields have also stayed elevated. Those levels are now central to the outlook for banks, insurers, growth stocks, mortgages and fiscal policy.
Prime Minister Sanae Takaichi’s government faces a difficult policy mix. It is trying to support households, expand defense spending and fund long-term strategic investment while debt-servicing costs are rising.
The government’s growth strategy calls for large-scale public and private investment through fiscal 2040 in semiconductors, artificial intelligence, energy security, defense, shipbuilding, robotics, space and other strategic sectors.
Those priorities support many of the companies investors bought on September 25, including chip-equipment makers, materials suppliers, optical-network companies, data-center infrastructure firms and advanced manufacturers.
However, higher interest rates make fiscal discipline more important. Investors want evidence that Japan can fund household relief and industrial policy without undermining confidence in public finances.
Oil prices remained a key risk, even though crude had eased from recent peaks. Lower oil has helped sentiment after the September BOJ meeting, but energy costs remain high enough to affect households, companies and the trade balance.
Japan imports most of its energy, so oil prices feed directly into gasoline, electricity, aviation fuel, shipping, logistics, chemicals and manufacturing. If crude rises again while the yen remains weak, inflation pressure could return quickly.
For households, the market story remains tied to prices. Wage growth has improved, but consumers continue to face high costs for groceries, gasoline, electricity, transport and services.
A weaker yen can make those costs worse. That is why the same currency move that supports exporters can also hurt households and importers.
For companies, the key question is whether higher wages, energy costs, logistics expenses and borrowing costs can be passed on to customers. Firms with pricing power, stable demand, strong brands or exposure to long-term investment remain better positioned.
Companies without pricing power face greater risk. If the yen weakens, rates rise and consumers resist price increases, margins could come under pressure even if nominal sales grow.
The international backdrop was mixed. U.S. markets had been uneven, with the Dow lower and the Philadelphia Semiconductor Index weaker, but the Nasdaq recovered from an intraday drop and ended slightly higher. That gave Tokyo enough confidence to buy growth shares, especially after the local market had already regained momentum.
U.S. interest-rate expectations remain a global issue. The Federal Reserve has raised rates and signaled that it remains committed to fighting inflation. That keeps U.S. yields high and supports the dollar, complicating the BOJ’s effort to stabilize the yen.
If U.S. yields remain elevated while Japan tightens only gradually, the yen may stay weak. If the BOJ becomes more hawkish, Japanese yields could rise further and pressure equities. That policy tension remains unresolved.
The AI theme also remains global. Investors are watching U.S. technology earnings, data-center investment, power constraints, memory demand, semiconductor equipment orders and the performance of South Korean and Taiwanese chip shares.
Japanese chip stocks are increasingly traded as part of the global AI supply chain. Overseas investors link Tokyo Electron, Advantest, Kioxia, Ibiden, Fujikura and Murata Manufacturing with Nvidia, Micron, Samsung Electronics, SK Hynix and Taiwan Semiconductor Manufacturing Co.
When global AI sentiment improves, Japanese shares can rise quickly because of their index weightings and supply-chain importance. When doubts emerge, the Nikkei can fall just as quickly because the same names dominate the benchmark.
The September 25 session was therefore encouraging, but not without risks. The rally was broader than September 24, thanks to banks and dividend buying, but it still depended heavily on semiconductor names.
What to watch next: whether the Nikkei can hold above 66,000, whether TOPIX continues to catch up, and whether the rally survives the September 28 interim dividend deadline.
Investors will monitor Tokyo Electron, Advantest, Kioxia, Ibiden, SoftBank Group, Fujikura, Furukawa Electric, Murata Manufacturing, TDK, Taiyo Yuden and Lasertec for signs of whether the AI rebound has staying power.
Banks will also remain important. Mitsubishi UFJ, Sumitomo Mitsui, Mizuho, Resona, regional banks, insurers and securities firms will show whether investors still believe higher rates and dividend demand can support value shares.
The yen near 158 to the dollar remains the most important domestic signal. Further weakness toward 160 would support exporters but revive inflation and intervention concerns. A rebound toward 153 would ease import costs but pressure exporters and carry trades.
Oil prices remain another key factor. Lower crude would help households and companies, while a renewed surge would intensify pressure on the trade balance and inflation outlook.
JGB yields will also remain critical. A stable bond market would support equities, while another rise in 10-year or super-long yields would pressure valuations and fiscal policy.
Other key factors will be U.S. economic data, Fed guidance, Middle East energy risks, South Korean semiconductor shares, Japanese inflation data, dividend-related trading and any further comments from Japanese or U.S. officials on currency stability.
September 25 showed that Tokyo’s rally is beginning to broaden beyond the narrow AI trade. Semiconductor shares still led the Nikkei, but banks and dividend buying helped TOPIX recover, giving the market a stronger foundation than earlier in the week. The next test is whether that broader support can survive after the dividend deadline, with the yen still weak and the BOJ’s next move unresolved.
