Asia markets rally as Japan’s Nikkei hits record high on Takaichi’s election Win

October 06, 2025 (MLN): Asian markets rallied Monday, with Japan’s Nikkei 225 surging more than 4% to an all-time high after the ruling Liberal Democratic Party (LDP) elected conservative lawmaker Sanae Takaichi as its new leader  paving the way for her to become Japan’s first female prime minister.

The rally in Tokyo was led by sharp gains in real estate, technology, and consumer cyclical stocks. Yaskawa Electric Corp jumped more than 20%, while Japan Steel Works climbed 14%.

Mitsubishi Heavy Industries and Kawasaki Heavy Industries gained 13% and 12%, respectively. The Topix index also advanced as much as 3%, marking its own record high.

Analysts attributed the surge to optimism over Takaichi’s expected “high-pressure economy” policy stance, which emphasizes boosting investment and demand through stronger public-private partnerships, CNBC noted.

“Takaichi is likely to urge the Bank of Japan to maintain its accommodative monetary stance,” Crédit Agricole CIB said in a weekend note, adding that she could allow for a modest 25-basis-point rate hike by early 2026.

The bank also said her administration would aim to “completely shift policy direction” toward expansionary measures to stimulate growth.

The yen weakened by more than 1.7% to briefly breach the ¥150 per U.S. dollar level before settling near 149.97. Deutsche Bank said the surprise leadership result could lead to “near-term losses in the yen toward 150,” but did not expect “material weakness beyond that., according to CNBC.

While a potential October rate hike by the Bank of Japan now appears less likely, markets still see a terminal rate near 1% under Takaichi’s leadership. Analysts also warned that further yen depreciation could intensify concerns over overtourism and rising property prices.

In the bond market, Japan’s 30-year government yield rose over 10 basis points to 3.263%, while the 20-year yield climbed six basis points to 2.674%. The 10-year benchmark yield was little changed at around 1.659%.

Elsewhere in the region, Australia’s S&P/ASX 200 added 0.19%, while Hong Kong’s Hang Seng Index slipped 0.22% and the Hang Seng Tech Index fell 0.66%. Mainland Chinese and South Korean markets were closed for holidays.

Previously in the U.S., the three major averages closed higher. The S&P 500 retreated from a record on Friday but held on to solid weekly gains despite a U.S. government shutdown dragging on for a third day, ticking up just 0.01% at 6,715.79.

The Nasdaq Composite declined 0.28% to settle at 22,780.51. The Dow Jones Industrial Average outperformed, trading higher by 238.56 points, or 0.51%, to finish at 46,758.28. The Russell 2000 also popped 0.72% to close at 2,476.18.

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