Nikkei Extends Record Rally as Takaichi Becomes Japan’s New Prime Minister
Japan’s Nikkei 225 index continued its record-breaking rally on Tuesday after Sanae Takaichi, known for her fiscally dovish policies, officially won the parliamentary vote to become Japan’s next prime minister.
The Nikkei 225 rose 0.4% to 49,404.66, holding near its all-time high after briefly jumping 1.55% earlier in the session. The broader Topix index added 0.1%, while Japanese government bonds (JGBs) saw muted movement, keeping yields mostly stable.
Markets React to Takaichi’s Victory
Takaichi’s victory follows her win as leader of the Liberal Democratic Party (LDP) on October 4, when traders began referring to the “Takaichi trade.” The strategy reflected optimism for equities and caution toward long-term bonds and the yen.
Her official appointment as prime minister was delayed after her long-time political ally Komeito withdrew from their coalition. However, markets surged again on Monday after the LDP secured a new partnership with the Japan Innovation Party (Ishin), solidifying parliamentary support for Takaichi’s administration.
According to Mizuho Securities economist Yusuke Matsuo, the new government may have limited room for aggressive fiscal expansion, as the coalition remains a minority. “We expect the administration to take a pragmatic stance on economic policy,” Matsuo said, noting that the Takaichi trade may not gain strong momentum in the medium term.
Focus Shifts to Cabinet Appointments
Takaichi secured 237 votes in the 465-seat lower house, securing her majority. Market watchers are now focused on her cabinet lineup, which will provide clues about future fiscal policy and debt management.
According to broadcaster FNN, Takaichi plans to appoint Satsuki Katayama, former regional revitalization minister, as finance minister — a move seen as signaling continuity and experience in handling Japan’s economic challenges.
Stock and Currency Moves
Out of all Nikkei-listed companies, 148 advanced while 74 declined, underscoring broad market strength. The top performers were video game developer DeNA, which rose 6.3%, and Renesas Electronics, which gained 4.5%.
In the bond market, the 10-year JGB yield edged down 0.5 basis points to 1.66%, while the two-year yield slipped 1 basis point to 0.935%.
Meanwhile, the Japanese yen weakened 0.2%, trading around 151.08 per U.S. dollar, as investors maintained a risk-on sentiment following the new government’s formation.
