Japan’s Nikkei 225 surged over 4% to a record high after Sanae Takaichi won the LDP leadership race, paving the way for her to become Japan’s first female prime minister. The rally was led by tech and industrial stocks, while the yen weakened past 150 against the dollar. Analysts expect Takaichi to maintain accommodative monetary policies, though a modest rate hike could come by 2026.
Japan Stocks Soar to Record Highs as Takaichi’s LDP Victory Lifts Market, Yen Breaches 150
Japan’s Nikkei 225 surged more than 4% on Monday to hit a record high, following the weekend election of Sanae Takaichi as the new leader of the ruling Liberal Democratic Party (LDP) — a victory that positions her to become Japan’s first female prime minister.
The rally was driven by strong gains in real estate, technology, and consumer cyclical stocks. Shares of Yaskawa Electric Corp jumped over 20%, Japan Steel Works climbed 14%, while Mitsubishi Heavy Industries and Kawasaki Heavy Industries advanced 13% and 12% respectively. The Topix Index also gained as much as 3%, reaching an all-time high.
The yen, meanwhile, weakened sharply — dropping more than 1.7% to briefly hit the 150-per-dollar mark before settling at 149.97. The last time the yen fell to this level was in August, according to LSEG data, prompting renewed concerns from Japan’s Finance Minister Katsunobu Kato. In October 2022, the yen had breached 151, triggering direct intervention by the Ministry of Finance.
Analysts said Takaichi’s victory reinforces expectations for continued accommodative monetary policy. According to a note by Crédit Agricole CIB, she is expected to urge the Bank of Japan (BOJ) to maintain its easy stance under her “high-pressure economy” policy framework, though she may support a modest 25-basis-point rate hike by early 2026.
“A Takaichi administration, recognising that the current economy is still weak, is expected to completely shift policy direction to a new approach that seeks to expand investment and demand through public-private partnerships,” Crédit Agricole CIB noted.
Deutsche Bank added that the yen’s near-term losses toward 150 were likely as markets adjust to the leadership change but predicted “no material weakness beyond.”
Bond yields edged higher, with the 30-year yield climbing more than 10 basis points to 3.263%, and the 20-year yield up six basis points to 2.674%. The 10-year benchmark was little changed at 1.659%.
Elsewhere in the region, Australia’s S&P/ASX 200 rose 0.19%, while Hong Kong’s Hang Seng Index dipped 0.22% and the Hang Seng Tech Index slid 0.66%. Markets in China and South Korea remained closed for holidays.
On Wall Street Friday, U.S. stocks closed higher for the week despite a continuing government shutdown. The S&P 500 edged up 0.01% to 6,715.79, the Dow Jones Industrial Average gained 238.56 points, or 0.51%, to finish at 46,758.28, while the Nasdaq Composite slipped 0.28% to 22,780.51. The Russell 2000 added 0.72% to close at 2,476.18.