Japan Stocks Soar as US Producer Prices Surprise with Flat July Reading

Japanese stocks rose significantly on Friday after a softer US inflation signal lifted global sentiment. The Nikkei was up 0.85% by midday, putting it on track for a roughly 5% weekly gain as traders leaned towards a Federal Reserve pause next month.

The catalyst was the unchanged US July producer prices, which eased fears that inflation is re-accelerating. When investors think US interest rates will stay put, bond yields often cool, and this tends to support stock prices because future profits are discounted at a lower rate.

This mood carried over into Tokyo, with software and tech-adjacent names like Shift, Nintendo, and Sony outperforming while a handful of retailers, manufacturers, and drugmakers lagged. The Nikkei 225 hit 68,889.01 by the midday break, and the broader Topix rose 0.69% to 4,204.99, putting it in range of a record close.