Tokyo Stocks Climb for Second Day Despite Headwinds.

Tokyo, Japan – Japanese equities posted a second consecutive day of gains on Wednesday, with the Nikkei 225 climbing 0.6% to close at 40,795 and the broader Topix Index advancing 1.02% to finish at 2,967. Investors in Tokyo appeared to brush off a weak handover from Wall Street and a series of challenging economic indicators both at home and abroad.

Overnight, U.S. markets closed lower as renewed concerns about stagflation—a combination of stagnant economic growth and high inflation—weighed on sentiment. These fears were fueled by a recent report from the Institute of Supply Management (ISM) that showed a slowdown in the U.S. services sector, a critical driver of the American economy.

Adding to the cautious global mood were fresh tariff warnings from U.S. President Donald Trump. He announced intentions to impose duties of up to 250% on pharmaceutical imports and also signaled potential levies on semiconductors, aiming to bring manufacturing of these key products back to the United States.

On the domestic front, the latest data from Japan’s labor ministry revealed that real wages fell for the sixth consecutive month in June. The 1.3% year-on-year drop highlights the ongoing struggle for pay increases to keep pace with inflation, which stood at 3.8% for the month. Nominal cash earnings did rise by 2.5%, but this was not enough to offset the rising cost of living.

Despite these macroeconomic challenges, several corporate developments captured investor attention in Tokyo.

Shares of Mitsubishi Heavy Industries surged 4.8% after the company secured a landmark A 6.5 billion contract to build Australia’s next fleet of warships. The deal for 11 advanced Mogami-class frigates marks a significant milestone for Japan’s defense export industry.

In contrast, semiconductor equipment manufacturer Tokyo Electron saw its stock drop 3.8%.The decline followed a decision by Mizuho Securities to downgrade the company’s stock from “Buy” to “Neutral.”