FX168 Financial News (Asia Pacific) reported that on Monday (December 2), the Japanese stock market closed higher, with financial stocks rising as the market bets that the Bank of Japan may raise interest rates soon, and expectations for the Japanese government pension investment fund (GPIF) to increase its stock holdings also boosted market sentiment.

At the close, the Nikkei index, composed of 225 stocks, rose by 304.99 points from last Friday, an increase of 0.80%, closing at 38,513.02 points. The broader TOPIX index rose by 34.01 points, an increase of 1.27%, closing at 2,714.72 points. #JapanMarket#

On the main board of the Tokyo Stock Exchange, the sectors with the largest gains included insurance, banks, and nonferrous metals stocks.

Insurance stocks performed particularly well, leading the 33 industry sub-indices of the Tokyo Stock Exchange, with an increase of 3.35%. Among them, Dai-ichi Life Holdings soared by 6.27%. The banking sector rose by 2.75%.

Shiseido's stock price plummeted by 6.6%, becoming the worst performer in the Nikkei index. Previously, the cosmetic manufacturer lowered its profit forecast for the next two years due to declining sales in the China market.

The Nikkei index erased earlier losses as the Bank of Japan Governor Kazuo Ueda said in an interview over the weekend that "the timing for a rate hike is approaching," leading to gains in bank and other financial stocks, with the market believing that borrowing costs may rise.

At the same time, reports indicate that the Japanese government proposed raising GPIF's investment return target from 1.7% to 1.9%, paving the way for increased stock purchases. Analysts pointed out that this raised speculation that the fund might increase its stock holdings.

Currently, the fund's asset allocation is almost evenly distributed among Japanese stocks, Japanese bonds, foreign stocks, and foreign bonds.

"Market participants speculate that the fund may slightly increase its equity holdings, although GPIF has not made a clear statement," said Toshikazu Horiuchi, a stock market strategist at Iwai Cosmo Securities.

In addition, due to the weakening of the yen, export-oriented auto stocks are also supported by bids, with investors expecting this to improve profits when companies repatriate overseas earnings.

In the forex market, the dollar/yen briefly traded above 150, after a wave of yen buying triggered by speculation about the Bank of Japan possibly raising interest rates at this month's policy meeting, with dollar/yen once dropping to 149.50. However, the dollar was subsequently bought back, driving exchange rates to rebound.

USA president-elect Trump demanded on Saturday that BRICS countries abandon plans to create a new currency or support a currency that replaces the dollar, warning that 100% tariffs will be imposed and market access to the USA will be restricted.

On his social platform Truth Social, Trump denied the possibility of BRICS countries replacing the dollar in global trade, stating that any country attempting such actions would jeopardize their relationship with the USA.

Fundamentally, according to preliminary data from the Japanese Ministry of Finance, Japan recorded a trade surplus of 109.5 billion yen in the first ten days of November, compared to a deficit of 489.4 billion yen in the same period last year. This was due to a sharp decline in imports.

S&P Global stated that the manufacturing condition has deteriorated for the fifth consecutive month, with the au Jibun Bank Japan Manufacturing PMI dropping to 49.0 in November, marking the largest decline since March, due to weak demand for autos and semiconductors.

Additionally, Japanese companies saw a year-on-year increase of 8.1% in factory and equipment investment from July to September, up from 7.4% in the previous quarter. Among them, spending by manufacturers grew by 9.2%, while non-manufacturers saw a growth of 7.4%.