We review the major events of 2025 and outline the key points and themes that will shape the market in 2026. The main factors individual investors should watch, including developments at the Bank of Japan and in US-China relations, are presented in summary.
In 2025, stock prices moved sharply higher following the Trump shock in the spring, with the Nikkei Average breaking through the 50,000 mark and reaching a record high. External factors, including a Bank of Japan rate hike, concerns about AI-related developments originating in China, and US tariff policy, also influenced market movements.
In the second half of the year, short covering gathered pace and the Nikkei Average strengthened its uptrend from the 40,000 range. The July US-Japan agreement and expectations for policies under the Takaichi (高市) administration provided support, and the index briefly rose above 50,000 for the first time, although concerns also spread after the rapid advance. Signs of a correction emerged in AI- and semiconductor-related stocks, while expectations of a rate hike, driven by yen depreciation, became a factor capping further gains.
Market developments in 2026 will focus on the outlook for additional Bank of Japan rate hikes, and market conditions could change depending on US monetary policy and the results of the US midterm elections. In politics, the future of a coalition government comprising the Liberal Democratic Party and the Japan Innovation Party, as well as the Takaichi (高市) administration's future approval ratings, is likely to attract market attention. In addition, themes including sports, AI, semiconductors, quantum technology, defense and cybersecurity are expected to draw interest.
At year-end, developments in the 2026 online brokerage rankings and the possibility of commission-free trading for NISA accounts may become topics of discussion. Preparations for securities accounts and the usability of trading tools are expected to influence investment activity.