Japan's Nikkei Stock Average rose 0.5% in early trade after preliminary data showed the economy grew 0.3% in the second quarter, below the 0.5% consensus, with the softer reading expected to keep the Bank of Japan on hold.
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Nikkei rises 0.5% as weak GDP growth points to BOJ hold
The Nikkei Stock Average rose 0.5% in early trade after preliminary data showed Japan's economy grew 0.3% in the second quarter, below the 0.5% consensus.
The Cabinet Office's flash estimate, released Monday, showed annualized growth of 1.1%, missing the 2.0% forecast and slowing from 1.8% in the first quarter. The GDP deflator, a measure of price changes, rose 2.6% from a year earlier. The softer reading is expected to keep the Bank of Japan on hold at its next policy meeting, traders said.
The Nikkei 225 traded at 69,012.38 points, with tech names leading gains. Kioxia rose 2.85% to 55,270 yen (about $348), while SoftBank Group edged up 0.07% to 5,743 yen. Memory chip stocks extended their advance as investors focused on AI infrastructure demand and changes in the memory industry's climate. South Korea's market was closed for a substitute Liberation Day holiday.
The yen traded at 159.25 per dollar, down nearly 0.05%, after the weak growth data reduced the case for near-term tightening. The move tracked Wall Street's overnight session, where the S&P 500 fell 0.17% to 7,785.76 and the Nasdaq Composite dropped 0.28% to 26,729.16 after weak US economic data. The Philadelphia Semiconductor Index snapped a three-week winning streak, though memory chip names stayed strong — SanDisk surged more than 7% on Friday for a 35% weekly gain, and SK Hynix added over 20% for the week.
Despite Friday's retreat, the S&P 500 and Nasdaq each secured a third consecutive weekly gain, rising 0.36% and 0.14%, respectively, while the Dow Jones Industrial Average fell 0.56% for the week. The resilience in memory chip makers reflected the strength of AI-related demand even as broader markets wobbled on soft economic data.
The weak growth print lowers the odds of a BOJ rate increase, which could limit yen appreciation and support Japanese equities. The central bank's next policy decision will be closely watched for signals on the pace of normalization, with the softer data giving policymakers room to hold rates steady.
This article is for informational purposes only and does not constitute investment advice.
[1] Nikkei Rises 0.5%; Weaker 2Q GDP Growth Could Prompt a BOJ Hold[2] Nikkei 225 Rises 0.43% in Early Trade, Kioxia Gains Nearly 3%; South Korean Markets Closed[3] Japan Q2 GDP Growth Below Estimates — TradingView News[4] Japan's economy expands by 0.3% in Q2 - Breaking The News[5] Japan’s GDP grows 0.3% QoQ in Q2 2026 vs 0.5% expected
