Nikkei 225 Hits Record High as Takaichi Set to Lead Japan

Japan’s Nikkei 225 surged more than 4 percent on Monday, hitting a record high, after the ruling Liberal Democratic Party elected Sanae Takaichi as its new leader, positioning her to become the country’s first female prime minister.

The rally was driven by strong gains in real estate, technology, and consumer cyclical stocks, with Yaskawa Electric Corp soaring over 20 percent, Japan Steel Works up 14 percent, and Mitsubishi Heavy Industries and Kawasaki Heavy Industries gaining 13 percent and 12 percent respectively.

Analysts expect Takaichi’s administration to adopt a “high-pressure economy” strategy, favoring accommodative monetary policy from the Bank of Japan (BOJ) while being open to a modest 25-basis-point rate hike by January 2026.

Key Highlights

Nikkei 225 jumped 4 percent on optimism over Sanae Takaichi’s leadership
Topix index also hit an all-time high as tech and industrials rallied
Yen weakened while Japan’s long-term bond yields rose sharply

Crédit Agricole CIB noted that her policies could mark a complete overhaul of Japan’s economic direction, focusing on boosting investment and demand via public-private partnerships.

Alongside the Nikkei, the Topix index also climbed 3 percent to a record high. However, the Japanese yen weakened 1.45 percent to 149.59 against the U.S. dollar. Bond yields saw mixed movement, with the 30-year yield jumping over 10 basis points to 3.263 percent and the 20-year yield rising six points to 2.674 percent, while the 10-year held steady at 1.659percent.

Elsewhere in Asia, Australia’s ASX/S&P 200 rose 0.19 percent, while Hong Kong’s Hang Seng Index fell 0.22 percent and the Hang Seng Tech Index slipped 0.66 percent. Chinese and South Korean markets remained closed for holidays.

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In the U.S. last Friday, major indices posted gains despite the ongoing government shutdown, with the Dow Jones rising 238 points, the S&P 500 holding near record levels, and the Russell 2000 up 0.72 percent.