FX.co ★ Nikkei 225 Finishes 0.6% Lower

On Monday, the Nikkei 225 declined by 315 points or 0.6%, settling at 50,376. This downturn reversed the gains seen in the previous session as trading volume decreased with the approach of the year-end holidays. Market sentiment became cautious due to China's significant military exercises near Taiwan, part of its "Justice Mission 2025." Additionally, investors became wary ahead of the upcoming release of the U.S. Federal Reserve's latest meeting minutes on Tuesday. Earlier this month, the Federal Reserve reduced interest rates but indicated a more cautious approach to further easing, forecasting only one additional rate cut next year. Among the major decliners were Advantest Corp. (-2.3%), Daikin Industries (-2.0%), Japan Tobacco (-1.6%), and NEC Corp. (-1.2%). Despite the decline, Japanese stocks are positioned to conclude 2025 on a strong note, with the Nikkei rising approximately 28%, potentially securing its third consecutive annual gain. This rally has been supported by the sustained economic recovery, robust earnings, diminishing trade obstacles, and Japan's relatively low real policy rate. In contrast, the broader Topix index rose modestly by 0.1%, marking a third consecutive session of gains.