Japan Market Daily | Kabutaro & Friends

On July 1, 2026, the Nikkei 225 snapped a two-day rally to close down 210.45 yen at 71,432.70 yen. Although the Tokyo market opened higher tracking overnight gains in U.S. tech shares, profit-taking dominated after the Bank of Japan's June Tankan survey revealed that the Business Conditions Diffusion Index (DI) for large manufacturers stood flat at plus 13, prompting cautious sentiment regarding the economic outlook. In the FX market, the USD/JPY cross remained locked in a historic weak-yen zone in the upper 161 yen range, driven by persistent buying of the greenback amid widening yield differentials. On the macroeconomic front, Japan's June domestic new vehicle sales rose 2.1 percent year-on-year to 398,200 units, demonstrating that while the impact of shipment suspensions due to certification irregularities was easing, the supply chain is still in the process of recovery.