Japan's Nikkei Closes 2025 with Stellar 26% Annual Gain Despite Tech Retreat
Japan's Nikkei 225 concluded 2025 with an exceptional 26% annual surge, marking the third consecutive yearly gain and the strongest performance since 2023. Despite closing 0.40% lower at 50,339.48 on the final trading day, the index achieved historic milestones including surpassing 50,000 for the first time. Prime Minister Takaichi highlighted the market's resilience in overcoming first-half challenges through corporate strength and policy support.
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Japan's Nikkei share gauge closed lower on the final trading day of 2025, dragged down by the technology sector that has been a key driver of the year's massive gains. The benchmark Nikkei 225 Index slid 0.40% to close at 50,339.48, while the broader Topix lost 0.50%.
Exceptional Annual Performance Marks Historic Achievement
Despite the final day's decline, the Nikkei secured a remarkable 26% surge for 2025, marking a third consecutive yearly gain and the most substantial increase since 2023. The broader Topix climbed 22% for the year, reflecting the overall strength of Japanese equities throughout the period.
| Index Performance: | 2025 Annual Gain | Final Closing Level |
|---|---|---|
| Nikkei 225: | 26% | 50,339.48 |
| Topix: | 22% | Not specified |
Japanese equities have been on a roll, benefiting from a corporate governance push by the Tokyo Stock Exchange and more recently from euphoria over artificial intelligence investment. The Nikkei reached another milestone, touching an intraday record high of 52,636.87 on November 4, after Sanae Takaichi was elected prime minister on a campaign of huge fiscal stimulus.
Prime Minister Highlights Market Resilience
"The first half of the year was weighed down by global economic instability, including rising prices, labour shortages, and U.S. tariffs," Takaichi said at a ceremony at the exchange after the closing bell. "But in the latter half, the resilience of Japanese companies, together with policy support, propelled the Nikkei to a remarkable turnaround, rising past the 50,000 mark for the first time in history."
Technology Sector Pressures Final Trading Session
Wall Street's main indexes ended lower overnight, as tech stocks retreated from last week's rally that pushed the S&P 500 to record highs. The drop in U.S. equities and a slump by domestic artificial intelligence heavyweight SoftBank Group were the main factors dragging Japanese shares lower, according to Nomura Securities strategist Wataru Akiyama.
"Rather than a fading of expectations around AI, it appears to be driven by end-of-year adjustment selling amid thin trading," Akiyama said. "So, we are not overly concerned, given how much share prices have risen this year."
SoftBank Leads Declines Despite Stellar Annual Performance
SoftBank slid 1.90% and was the biggest drag on the Nikkei, after the company announced it would buy digital infrastructure investor DigitalBridge Group in a deal valued at $4.00 billion. Despite the day's decline, SoftBank shares surged 93% throughout 2025, highlighting the stock's exceptional annual performance.
| Major Movers: | Change | Notes |
|---|---|---|
| SoftBank Group: | -1.90% | Biggest Nikkei drag, announced $4B acquisition |
| Fujitsu: | +2.30% | Largest gainer |
| Screen Holdings: | +1.60% | Second-largest gainer |
| Sumitomo Metal Mining: | -4.80% | Largest loser |
| Rakuten Group: | -2.70% | Second-largest loser |
Market Breadth Reflects End-of-Year Adjustment
Market breadth showed selling pressure with 61 advancers on the Nikkei against 162 decliners, indicating broader profit-taking activity. The trading session reflected typical end-of-year adjustment activity amid thin volumes, as investors concluded a historically strong year for Japanese equities.
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