[Recap] Japan Stock Market, Aug 10, 2026: Nikkei Rebounds 2.08% to 66,970 as Weak US Jobs Data Cools Rate-Hike Bets

Hey everyone, Hirokichi here. Today I’m recapping Japan’s stock market on Monday, August 10, 2026. After a soft end to last week, Tokyo stocks started the new week on a strong note, with both the Nikkei 225 and the TOPIX posting solid gains. Let’s dig into what drove the move.

Nikkei 225 rebounds for the first time in three sessions, briefly topping 67,000

The Nikkei 225 closed at 66,970.22 yen on August 10, up 1,363.51 yen (+2.08%) from the previous Friday. That’s its first gain in three sessions after two straight days of losses on August 6 and 7. During the session it briefly broke above the psychologically important 67,000 mark, but buying paused once it hit that level, and the market shifted into a wait-and-see mode. The index had closed at 66,300 on August 5, then slipped to 65,683 on August 6 and 65,606 on August 7, so most of that pullback was erased in a single session on August 10.

Technically, the index broke above its 25-day moving average, which flipped the short-term trend upward. That said, as I’ll explain below, this rally was driven almost entirely by factors from the US side, so it’s hard to call it a sign of homegrown strength in the Tokyo market.

TOPIX extends its winning streak to five days, nearing record territory

The TOPIX (Tokyo Stock Price Index) rose for a fifth straight session, closing up 25.68 points (+0.63%) at 4,100.61. The gain was smaller than the Nikkei’s, but it shows the broader market is holding steady near its highs.

The trigger: a sharp miss in the US jobs report

The direct trigger for this rally was the US July jobs report released the previous Friday, August 7. Nonfarm payrolls fell by 23,000 versus a market forecast for a gain of roughly 80,000 to 83,000. On top of that, both May and June figures were revised down sharply (May: from +129,000 to +63,000; June: from +57,000 to +20,000).

Following the weak data, the odds of a rate hike at the September FOMC (Federal Open Market Committee, the Fed’s policy meeting) dropped from 55% to 44% according to FedWatch. The US 2-year Treasury yield fell from 4.23% to 4.15%, and the dollar weakened against the yen, sliding from 158.41 to 156.68.

Even as concerns about a US economic slowdown grew, hopes that the Fed would hold off on an early rate hike took over. US stocks rallied that Friday, with the Dow rebounding, the Nasdaq Composite jumping more than 1% for its first gain in three sessions, and the S&P 500 hitting a fresh record high despite the weak jobs number.

Tokyo buying centered on AI and semiconductor names, though volume stayed thin ahead of the holiday

With tech stocks, especially semiconductors, leading gains in the US on Friday, Tokyo opened August 10 with buying concentrated in AI and semiconductor-related names. That’s a big reason the Nikkei’s percentage gain stood out compared with other major indexes.

At the same time, Tokyo is heading into its quiet summer stretch around Mountain Day (a national holiday on August 11). With fewer market participants around and the exchange closed the following day, there was little appetite to build new positions, and trading stayed light in the afternoon session.

What to watch next: a rally still leaning on outside factors

Here are three things I’ll be keeping an eye on:

(1) Economic data ahead of the September FOMC: Whether the weak jobs report was a one-off or the start of a real slowdown will become clearer with upcoming data like the CPI (Consumer Price Index) and retail sales.

(2) The currency market: If the dollar keeps weakening against the yen, that could become a headwind for export-heavy stocks.

(3) The lack of homegrown momentum: Market commentators have noted that this move has been driven almost entirely by external factors, so it’s hard to call it a genuine shift in underlying strength. That suggests the market could keep swinging in either direction depending on the next headline out of the US.

For more on why I think US stocks remain resilient over the long run, check out my earlier post, “Why the US Stock Market Should Stay Strong for the Next 30+ Years.” And for a look back at when the Nikkei first broke its post-bubble record, see this earlier recap.

Trading volume tends to look thinner than usual around the Mountain Day holiday, so price swings can look bigger than they really are. I’ll keep watching calmly rather than reacting to every move. See you next time!

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* This article is for informational purposes only and does not recommend any specific investment. Please make investment decisions at your own responsibility.

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