Japan's Bond Yields Spiked Ahead of Upper House Elections, Machine Tool Orders Eased In May

Akira Ito
14 Jul, 2025
Tokyo

Stocks in Japan fluctuated ahead of Upper House elections this week, and investors reviewed the latest U.S. tariff announcements. 

The Nikkei 225 Stock Average decreased 0.2%, and the broader Topix inched higher by a fraction as investors focused on a possible increase in government spending after the Upper House elections this weekend.

The ruling coalition is likely to announce additional government programs to support household spending, which will add to already large government debt. 

On July 20, 124 of the 248 members of the upper house of the National Diet are scheduled for an election, and the ruling coalition needs to win at least 50 seats to secure a majority. 

Japan's 10-year bond yield edged up to 1.57% amid growing fiscal concerns ahead of the Upper House elections, and the ruling coalition is likely to support a consumption tax cut. 

On the economic front, Japan's machine orders increased in May from the previous month, but the core orders declined, the Cabinet Office reported Monday. 

The seasonally adjusted total value of machinery orders received by 280 manufacturers increased by 3.8% in May from the previous month. 

Core orders, which exclude large and volatile orders for ships and power plants, decreased 0.6% from the previous month.

Investors reviewed the latest U.S. tariff announcements and braced for higher import duties on Japanese goods. 

The U.S. president announced his plans to impose 30% tariffs on Mexico and the European Union starting August 1. 

 

Japan Indexes and Stocks 

The Nikkei 225 Stock Average decreased 0.2% to 39,498.89, and the broader Topix edged up 0.03% to 2,824.13. 

Fast Retailing Co. Ltd. rebounded 1.4% to ¥44,140.0, after the stock fell as much as 7% in Friday's session. 

The parent company of Uniqlo signaled that its U.S. operations are likely to suffer in the second half because of higher import duties and unpredictable U.S. trade policy.