Nikkei Average Rebounds, Yen Rises; GPIF Domestic Investment Shift and Inflation in Focus

In the Tokyo market over the weekend, the Nikkei average rebounded for the first time in three days, and the yen also rose. The trigger was Finance Minister Katayama's suggestion of expanding GPIF's domestic investment. Meanwhile, June corporate goods prices rose 7.1%, the highest increase in three years and three months, intensifying inflationary pressure. Corporate salaries hit a record high, but bankruptcies also reached a 12-year high, highlighting the polarization of the economy.

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Nikkei Average Rebounds for First Time in Three Days, Up 1.2% on GPIF Domestic Investment Shift On the Tokyo stock market on the weekend of the 10th, the Nikkei average rebounded for the first time in three days, rising 813 yen from the previous day to 68,557 yen. Contributing factors were Finance Minister Katayama's indication of a policy to encourage GPIF to expand investment in domestic financial assets, as well as a rise in semiconductor stocks. However, it fell 1.7% over the week. The June corporate goods price index rose 7.1% year-on-year, the highest increase in three years and three months, raising concerns about increasing cost-push pressure. 1 2

Yen Rises to Upper 161 Yen Level, Yen Buying Dominates on Finance Minister Katayama's Remarks In the New York foreign exchange market on the 10th, the yen rose 0.44% against the dollar to 161.67 yen. The market focused on Finance Minister Katayama's indication of a policy to encourage pension funds to expand domestic investment. Amid continued wariness of possible currency intervention by the government and Bank of Japan, this triggered yen buying. 3 4 5

Average Annual Salary at Listed Companies Hits Record High of 6.92 Million Yen According to a survey by Teikoku Databank, the average annual salary at listed companies for fiscal 2025 reached a record high of 6.92 million yen. It increased for the fifth consecutive year, driven by inflation in starting salaries and base pay raises for existing employees. By industry, the shipping industry was the only one to exceed 10 million yen. 6

First-Half Bankruptcies Exceed 5,000, Highest in 12 Years; Service Industry Most Numerous The number of bankruptcies in the first half of 2026 exceeded 5,000 according to tallies by Teikoku Databank and Tokyo Shoko Research, reaching a 12-year high. Rising prices and labor shortages were contributing factors, with small-scale bankruptcies being prominent. The service industry had the most, and June alone also exceeded 1,000 cases. 7

Takaichi Administration's 'Vertical AI' Strategy: Concentrated Public-Private Investment in 19 Fields The government decided on a revised draft of the AI Basic Plan, designating 19 fields including manufacturing, defense, and firefighting as priority areas. It will promote the development and implementation of 'vertical AI' tailored to specific industries, and outlined a framework for concentrated public-private investment. It also set a target to introduce AI automatic response for emergency calls (119) by 2030. 8