EconoTicker

Japan’s Nikkei 225 soared 4.8% to a record 47,944.76, after the ruling LDP selected Sanae Takaichi as its new leader — a move seen as favoring continued pro-growth and ultra-loose monetary policies.

The JPY slumped sharply as investors bet the Bank of Japan will maintain its accommodative stance under the new leadership, fueling optimism for exporters and equities.

Market impact: Highly positive for Japanese stocks, negative for the JPY; the policy continuity narrative supports risk sentiment globally and lifts Asian equity markets.

Japan’s private-sector activity showed mixed signals in September. The Composite PMI came in at 51.3 (expected 51.1, prior 52.0), pointing to slower overall growth. Meanwhile, the au Jibun Bank Services PMI rose to 53.3, slightly above forecasts (53.0) and the previous month (53.1), highlighting resilience in the services sector.

Market impact: Neutral for JPY; services remain a bright spot, but softer manufacturing continues to drag the composite lower.

Historical context: While the PMI has stayed above 50 for much of 2024–2025, the September reading marked one of the slowest expansion rates this year.

Japan’s August labor data showed signs of softening. The jobs-to-applicants ratio slipped to 1.20 (expected 1.22, prior 1.22), while the unemployment rate ticked up to 2.6% (expected 2.4%, prior 2.3%).

Market impact: Slightly negative for JPY, as the data points to easing labor market tightness, potentially reducing pressure on wages.

Historical context: Joblessness remains near multi-decade lows, but the dip in job openings per seeker suggests demand for labor is cooling compared with earlier in the year.

• Household Confidence (Sep): 35.3 (expected 35.1, prior 34.9).

Market impact: Slightly supportive for JPY, as improved sentiment signals cautious optimism among households despite cost-of-living pressures.

Historical context: Confidence rose to its highest level since early 2024, though it remains well below the neutral 50 level, reflecting persistent household caution.

• 10-Year JGB Auction: 1.635% (prior 1.612%).

Market impact: Slightly supportive for JPY, as higher yields reflect stronger investor demand for compensation against inflation and BOJ policy uncertainty.

Historical context: The auction yield climbed to its highest level since 2011, underscoring persistent upward pressure on Japanese government bond yields.

• Foreign Bonds Buying: -¥162.0B (prior +¥816.7B).
• Foreign Investments in Japanese Stocks: -¥963.3B (prior -¥1,747.1B).
• Monetary Base (YoY, Sep): -6.1% (prior -4.1%).

Market impact: Negative for JPY, as weaker capital inflows and a deeper contraction in the monetary base highlight ongoing liquidity tightening and reduced foreign appetite for Japanese assets.

Historical context: The monetary base posted its steepest annual decline since 2022, while foreign stock and bond flows showed continued net selling.

• All Big Industry CAPEX (Q3): +12.5% (prior +11.5%).
• Big Manufacturing Outlook (Q3): 12 (expected 13, prior 12).
• Large Manufacturers Index (Q3): 14 (expected 14, prior 13).
• Large Non-Manufacturers Index (Q3): 34 (expected 33, prior 34).

Market impact: Neutral to slightly supportive for JPY; stronger CAPEX plans offset softer-than-expected outlook in manufacturing.

Historical context: Investment intentions remain robust, while sentiment in both manufacturing and non-manufacturing sectors shows stability near multi-year highs.

• Construction Orders (YoY, Aug): +38.9% (prior -19.0%).
• Housing Starts (YoY, Aug): -9.8% (expected -5.2%, prior -9.7%).

Market impact: Mixed for JPY; strong construction orders point to future building activity, but weak housing starts highlight continued stress in the residential sector.

Historical context: The surge in construction orders marks a sharp turnaround from July’s contraction, while housing starts remain stuck in negative territory for a second straight month.

• 2-Year JGB Auction: 0.949% (prior 0.863%).

Market impact: Slightly supportive for JPY, as higher short-term yields reflect firm demand expectations for tighter monetary conditions.

Historical context: The 2-year yield climbed to its highest level in over a decade, underscoring shifting market bets on the Bank of Japan’s policy path.

• Large Retailers’ Sales (MoM, Aug): -1.1% (prior -1.6%).
• Large-Scale Retail Sales (YoY, Aug): +3.0% (prior +2.0%).
• Retail Sales (YoY, Aug): -1.1% (expected +1.0%, prior +0.4%).

Market impact: Negative for JPY, as overall retail activity weakened more than expected, highlighting fragile consumer demand despite strength in large-scale stores.

Historical context: Retail sales posted their steepest decline in over a year, diverging from the resilience seen in large-scale retailers.

• Industrial Production (MoM, Aug): -1.2% (expected -0.7%, prior -1.2%).
• Forecast 1M Ahead (Sep): +4.1% (prior +2.8%).
• Forecast 2M Ahead (Oct): +1.2% (prior -0.3%).

Market impact: Neutral to slightly supportive for JPY, as the August decline was offset by strong forecasts for a rebound in September and October.

Historical context: The outlook suggests a sharp turnaround in output momentum, with September’s forecast marking the strongest monthly gain in nearly a year.

• Coincident Indicator (MoM, Jul): -1.8% (vs. -2.6% prior, 0.7% expected), showing a deeper decline in current activity.
• Leading Index (MoM, Jul): +1.1% (vs. 0.8% prior/expected).
• Leading Index (Jul): 106.1 (vs. 105.9 prior, 105.0 expected), signaling improved future momentum.

Market impact: Positive for JPY sentiment, as the rebound in forward-looking indicators suggests some resilience in Japan’s economic outlook.

Historical context: The Leading Index climbed above consensus, staying well above 105, hinting at stabilization despite weakness in coincident data.