Japan's Nikkei rises on AI rally as hopes of pension asset shift lift yen, bonds

Sumitomo Electric Industries

10/07/2026 08:13

Adds comments in paragraphs 6 and 12, updates with closing prices
By Junko Fujita and Rocky Swift

    TOKYO, July 10 (Reuters) - The Nikkei share gauge rose on Friday, supported by a rally in AI-related stocks, while the country's bond market and currency also advanced on a potential redirection in the investment strategy of Japan's vast pension funds. 
The benchmark Nikkei 225 .N225 closed 1.2% higher at 68,557.73, after rising as much as 2.4% earlier in the session. The broader Topix .TOPX edged up 0.39% to 4,036.08.
The yield on Japan's 10-year government bond JP10YTN=JBTC fell 11.5 basis points (bps) to 2.76%, retreating from a three-decade high. The yen JPY= strengthened 0.5% against the greenback to 161.550. 
Tech shares on Wall Street soared after chipmaker Micron Technology MU.O laid out plans to invest more than $250 billion in the United States through 2035. 
"Japanese stocks took cues from the rally of the U.S. technology stocks overnight," said Shuutarou Yasuda, a market analyst at Tokai Tokyo Intelligence Laboratory. 
The index trimmed early gains as South Korea's benchmark KOSPI .KS11 narrowed its strength, said Kazuaki Shimada, chief strategist at IwaiCosmo Securities. 
Chip-related shares led the Nikkei's gains, with Sumco 3436.T surging 15.40% to a daily limit high of 5,244 yen. 
SoftBank Group 9984.T, a tech investment conglomerate, climbed 10.65% and chip-testing equipment maker Advantest 6857.T rose 2.3%. 
The gains in bonds and the currency followed comments from Finance Minister Satsuki Katayama on Thursday that the government would explore measures to encourage pension funds, including the Government Pension Investment Fund (GPIF), to increase investments in domestic financial assets.
The prospect of Japan's largest pension investors directing more funds into local markets boosted sentiment across bonds and the yen, both of which have faced sustained pressure in recent years.
"Katayama's remarks helped reverse the selling trend of the Japanese government bonds, and the yen," said Masahito Sugawara, a senior strategist at Daiwa Securities. "Now half of the assets of Japanese pension funds are invested in foreign assets. The market bet a possible shift of the asset allocation would be positive to Japanese assets."
The yields extended the decline later in the session as foreign investors bought the JGBs to cover their short positions after the European market opened, said Miki Den, senior Japan rate strategist at SMBC Nikko Securities.
Shares of Fast Retailing 9983.T closed 3.59% lower, marking their steepest one-day drop since May 12. 


 (Reporting by Junko Fujita and Rocky Swift in Tokyo; Editing by Sherry Jacob-Phillips)
 ((rocky.swift@thomsonreuters.com;))