FX.co ★ Japanese Shares Fall on Fiscal Worries

On Tuesday, the Nikkei 225 Index declined by 1.11% to settle at 52,991, while the broader Topix Index decreased by 0.84% to reach 3,626. This marked the fourth consecutive session of losses for Japanese stocks, driven by escalating fiscal concerns that have pushed Japanese bond yields to unprecedented highs. These pressures were exacerbated following Prime Minister Sanae Takaichi's proposal to reduce the sales tax on food to zero, intensifying worries regarding fiscal sustainability due to uncertainties on how the government plans to compensate for the revenue shortfall. Additionally, Takaichi announced her intention to dissolve parliament at the week's end and schedule a general election for February 8, where her party is expected to secure additional seats and pursue policies focused on fiscal expansion. The technology sector was hit hardest in this selloff, with major declines seen in SoftBank Group (-3.3%), Disco Corp (-3.9%), Fujikura (-2.4%), Advantest (-3.1%), and Tokyo Electron (-2.6%).