The Nikkei Stock Average fell for a third consecutive session in Tokyo on 2 September 2026, closing sharply lower at ¥64,325.64. Long-term interest rates rose into the 3% range, and Nomura Securities' Kohei Okazaki (岡崎康平) views the rise in rates as “consistent” with inflation becoming entrenched.
The Nikkei Stock Average fell for a third consecutive session in Tokyo on 2 September 2026, closing ¥1,889.70 lower than the previous day at ¥64,325.64. In the domestic bond market, the yield on newly issued 10-year Japanese government bonds has risen into the 3% range. Nomura Securities' Kohei Okazaki (岡崎康平) explained that he views rising interest rates in Japan, where inflation has become entrenched, as a consistent development.
The view expressed is that global factors, including developments in US-China and Middle East affairs, the impact of crude oil prices, and diplomatic events scheduled for the period through year-end, are acting as risks for the equity market. Growing instability in the Middle East and another rise in commodity prices are also heightening market caution. It has been pointed out that rising interest rates in Japan are being influenced by these overseas factors while also moving in line with progress toward achieving the domestic inflation target.
Major international political events remain scheduled for later this year, and developments at the Federal Reserve, US-China relations, and policy trends in Europe and the United States could increase market volatility. While Kohei Okazaki (岡崎康平) has suggested that interest rates may continue to rise over the longer term, he has also stated that the situation could change depending on fiscal policy and the growth strategy. Fiscal uncertainty could ease at certain points, but a cautious view remains warranted.
New developments related to fiscal policy attracting market attention include the expansion of preliminary budget requests for fiscal 2027, consideration of a consumption tax cut, and the treatment of supplementary budgets. Fiscal events could potentially move in tandem with interest rates, but it has been avoided at this stage to conclude that fiscal policy alone is behind the rise in rates.