Japan’s Nikkei Soars 5% to Record High After Sanae Takaichi’s Rise
Across Asia, trading was thin as many markets — including mainland China, South Korea, and Taiwan — were closed for holidays.
Quick overview
- Japanese stocks surged over 5% to a record high following the election of Sanae Takaichi as leader of the ruling Liberal Democratic Party.
- The yen fell to a record low against the euro and breached ¥150 per dollar amid concerns over Japan's public debt.
- Takaichi plans to implement economic measures including local subsidies and support for wage hikes, while coordinating with the Bank of Japan.
- Market expectations for a Bank of Japan rate hike before year-end have decreased significantly.
Japanese stocks surged over 5% to a record high on Monday, while the yen tumbled following the election of Sanae Takaichi — a politician known for her moderately expansionary fiscal and monetary stance — as leader of the ruling Liberal Democratic Party, putting her on track to become Japan’s first female prime minister. Meanwhile, gold hit a new record near $4,000 per ounce.
The Nikkei Index surpassed 48,000 points for the first time ever, after Takaichi defeated the more moderate Shinjiro Koizumi in the party’s leadership vote, fueling expectations of stronger fiscal stimulus.
The yen slid as much as 2% against the dollar, breaching ¥150 per dollar for the first time since August 1, and hit a record low against the euro at ¥176.25. Mounting concerns over Japan’s public debt pushed 30-year bond yields to all-time highs, while short-term yields declined — reflecting reduced bets on further rate hikes by the Bank of Japan (BOJ).
Market odds of a BOJ rate hike before year-end dropped to 41% from 68% last Friday. Although Takaichi once called last year’s rate increase “stupid,” her recent tone has been more cautious, saying monetary policy should “remain aligned with government priorities.”
Analysts believe fears that her administration will push reckless fiscal spending or pressure the BOJ are “overblown,” noting her stance appears broadly aligned with that of BOJ Governor Kazuo Ueda, who favors a gradual normalization of policy.
Across Asia, trading was thin as many markets — including mainland China, South Korea, and Taiwan — were closed for holidays. Hong Kong’s Hang Seng fell 0.7%, while Australia’s main index dipped 0.1%.
Sanae Takaichi’s Economic Agenda
Japan’s new LDP leader said she will quickly implement economic measures, expanding local subsidies to offset rising prices. She also pledged support for wage hikes at small and medium-sized firms and relief for agriculture, forestry, and fisheries sectors facing cost pressures.
Takaichi added she would not rule out a consumption tax cut or tax relief for low- and middle-income households, and emphasized coordination with the BOJ to support demand-driven growth.
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