Japan's Spring Wage Negotiations Deliver Record Hikes, 10-Year Bond Yield Jumps to 17-Year High

Akira Ito
12 Mar, 2025
Tokyo

Stock market indexes in Tokyo closed nearly unchanged as investors reviewed the latest comments from the Bank of Japan chief and the outcome of spring wage negotiations. 

The Nikkei 225 stock average closed nearly unchanged and hovered near a nine-month low, and the TOPIX gained nearly 1%.

The Japanese yen strengthened against the U.S. dollar to 144.54 after the Bank of Japan governor said higher bond yields reflect market expectations of future rate hikes. 

Bank of Japan Governor Kazuo Ueda's comments supported the gains in the yen, and the Japanese government 10-year bond yield edged higher to 1.5%, the highest since the financial crisis of 2008. 

 

Record Wage Hikes After Shunto Spring Negotiations

Japan's spring wage negotiations, also known as shunto, concluded last week with major corporations agreeing to about a 6% increase in wages, the largest ever since record keeping began in 1993.

Amid labor shortages and rising inflation, leading corporations agreed to labor union demands, according to a tally prepared by the umbrella labor union organization Rengo. 

Japan's leading corporations raised wages for the second time in a row after two decades of wage stalls ended in 2023. 

The annual wage discussions, which generally start in mid-February and finish by mid-March, are widely watched by politicians and policymakers and provide a reference point for small and medium businesses to adjust their wages. 

Large companies in Japan provide about 30% of all private sector jobs. 

The large wage hike is likely to support the Bank of Japan's move to lift rates and contribute to economic expansion. 

Toyota Motor, the largest automobile maker in the world by volume, agreed to increase wages by as much as 24,450 yen, meeting the demand laid out by the union. 

Nissan Motor, IHI Corp, Kawasaki Heavy Industries, and Mitsubishi Heavy Industries also agreed to similar wage hike demands from the union. 

NEC agreed to raise its workers wages by as much as 17,000 yen per month, and Mitsubishi Electric Corp. agreed to lift wages by 15,000 yen.

On the economic front, Japan's business sentiment index among large corporations plunged to -2.4% in the first quarter of 2025, from 6.2% in the previous quarter, according to data released by Japan's Cabinet Office. 

Japan Indexes and Stocks 

The Nikkei 225 stock average edged up a fraction to 36,819.09, and the TOPIX advanced 0.9% to 2,694.91. 

Nissan Motor Co. increased 0.6% to ¥441.80 after the company's chief executive Makoto Uchida tendered his resignation, effective April 1, which could pave the path to resume merger negotiations with Honda. 

Honda Motor Co. decreased 0.2% to ¥1,448.0. 

Seven & I Holdings increased 1.6% to ¥2,178.50 as the embattled retailer remains in focus amid tactical moves by the company and the Canadian suitor Alimentation Couche-Tard Inc.