Nikkei Retreats as Investors Lock in August Gains

On August 29, 2025, Japan's Nikkei share average experienced a decline as investors engaged in profit-taking following the index's strong rally in August. The Nikkei, which had reached a record high of 43,876.42 on August 19, 2025, ended the month with a more than 4% rise. However, on the final trading day of the month, the tech-heavy index dropped 0.26% to finish the day at 42,718.47, trimming its gains for the week to 0.2%.

The broader Topix index also sank 0.47% to 3,075.18, losing 0.83% for the week, but gaining 4.49% this month, when it also scaled an all-time peak. The decline in Japanese stocks was attributed to a combination of factors, including a stronger yen and some weak economic readings.

Data released on August 29, 2025, showed that factory output fell more than expected last month, while retail sales rose only slightly, falling short of forecasts. The yen's overnight gains against the dollar also reduced the value of overseas revenues for Japanese automakers, with Toyota dropping 1.58% and Honda losing 1.29%.

Despite the recent pullback, the bullish outlook from strong corporate earnings "hasn't changed, and will continue to support the Nikkei" into September, according to Nomura strategist Maki Sawada. The recent rally in global equities, spurred by Wall Street's record run, has also been a positive factor for Japanese stocks.