Asian Markets Rise as Japan’s Nikkei Surges to Record High on Takaichi’s LDP Takeover

Japan’s benchmark Nikkei 225 index led rallies on Asian Markets, surging over 4% on Monday, reaching a historic high following the weekend election of Sanae Takaichi as leader of the ruling Liberal Democratic Party. Her victory positions her to become Japan’s first female prime minister, sparking investor optimism across key sectors.

The rally was led by robust gains in real estate, technology, and consumer cyclical stocks. Yaskawa Electric soared more than 20%, Japan Steel Works advanced 14%, while Mitsubishi Heavy Industries and Kawasaki Heavy Industries climbed 13% and 12% respectively.

Takaichi’s economic stance—centered on a “high-pressure economy”—is expected to reinforce Japan’s accommodative monetary policy. Analysts at Crédit Agricole CIB anticipate she will urge the Bank of Japan (BoJ) to maintain its current stance, with potential openness to a modest 25-basis-point rate hike by January 2026.

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“A Takaichi administration, recognising the fragility of the current economy, is expected to overhaul policy direction, focusing on expanding investment and demand through public-private partnerships,” CA-CIB noted.

The broader Topix index also gained as much as 3%, marking a fresh all-time high.

Meanwhile, the Japanese yen weakened by 1.72%, briefly touching the psychological 150 level against the U.S. dollar before settling at 149.97. The move reignited concerns from Finance Minister Katsunobu Kato, recalling October 2022 when the yen breached 151 and triggered government intervention.

Deutsche Bank analysts expect near-term yen depreciation toward 150 but do not foresee significant weakness beyond that level. They also noted that while the likelihood of a BoJ rate hike in October has diminished, markets continue to price in a terminal rate near 1%—a level still plausible under Takaichi’s leadership.

Bonds across asian markets responded with upward pressure on yields. Japan’s 30-year government bond yield rose over 10 basis points to 3.263%, while the 20-year yield added more than six basis points to 2.674%. The 10-year benchmark yield remained relatively stable at 1.659%.

Elsewhere in Asia-Pacific, Australia’s ASX/S&P 200 edged up 0.19%. Hong Kong’s Hang Seng Index slipped 0.22%, and the Hang Seng Tech Index declined 0.66%. Markets in China and South Korea were closed for public holidays and didn’t trade across asian markets today.

In the U.S., major indices ended last Friday higher despite ongoing government shutdown concerns. The Dow Jones Industrial Average led gains, rising 0.51% to 46,758.28. The Russell 2000 added 0.72%, while the Nasdaq Composite dipped 0.28%. The S&P 500 was nearly flat, up just 0.01% at 6,715.79.

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