Japan’s Nikkei Soars to Record High as Markets Cheer Historic Election of First Female Prime Minister
Japan’s Nikkei 225 index surged more than 4% to hit a record high Monday, propelled by the ruling Liberal Democratic Party’s historic election of Sanae Takaichi as its new leader. The vote on Saturday positions the staunch conservative to become the nation’s first female prime minister.
The market rally was led by significant gains in real estate, technology, and consumer cyclical stocks. Japan Steel Works led the charge, climbing 13%, while Mitsubishi Heavy Industries and Kawasaki Heavy Industries added 11% and 10.47%, respectively.
Analysts at Crédit Agricole CIB noted that given Takaichi’s support for a “high-pressure economy,” she is likely to ask the Bank of Japan to maintain its accommodative monetary policy, though she may be open to a modest 25 basis point rate hike by early 2026. The bank’s weekend note suggested a Takaichi administration would “completely shift policy direction” to expand investment and demand through public-private partnerships, recognizing the current economy remains weak.
The broader Topix index also rose over 3% to reach an all-time high.
The political shift impacted other financial instruments as the Japanese yen weakened 1.45% to trade at 149.59 against the U.S. dollar. Japan’s long-term bond yields climbed, with the 30-year yield rising over 10 basis points to 3.263%.
Elsewhere in the region, Australia’s ASX/S&P 200 rose 0.19%, and Hong Kong’s Hang Seng Index was set for a slightly higher open. Markets in China and South Korea were closed for holidays.
The positive momentum in Asia follows a mixed session on Wall Street last Friday, where the Dow Jones Industrial Average outperformed with a gain of 238 points despite a ongoing U.S. government shutdown.
