Global stock markets posted gains on Monday, buoyed by a surge in Japanese equities following Prime Minister Sanae Takaichi’s landslide victory in Sunday’s general election. The rally extended to other Asian markets and saw modest increases in U.S. Trading, while gold, silver, and bitcoin stabilized after recent volatility.
Japanese Equities Reach Record Highs
Japan’s Nikkei 225 index soared, crossing the 57,000 mark for the first time before closing up 3.9% at , 2026, at 56,363.94. The broader Topix index also reached a record high, finishing up 2.3% at 3,783.94. The gains were driven by investor anticipation of Takaichi’s economic policies, which are widely viewed as a continuation of “Abenomics” with a focus on growth and looser monetary policy.
The election outcome handed the ruling Liberal Democratic Party a two-thirds supermajority in the 465-seat lower house, according to public broadcaster NHK. This decisive win provides Takaichi’s administration with a stronger mandate to pursue proactive fiscal policies and strategic investments, bolstering confidence in the Japanese economy.
The “Takaichi Trade” and Currency Implications
Analysts have dubbed the recent market activity the “Takaichi trade,” reflecting expectations that her policies will stimulate equity markets while simultaneously weakening the yen. This expectation is rooted in her commitment to higher government spending and a looser monetary policy. The Japanese yen strengthened to 156.88 against the dollar on Monday, a movement partially counter to the anticipated weakening, suggesting market complexity.
Yields on Japanese government bonds also rose, with the 10-year yield increasing nearly 4 basis points to 2.274% and the 20-year yield adding about 3 basis points to 3.158%. This indicates investor reassessment of fixed-income assets in light of the potential for increased government borrowing and inflationary pressures.
Broader Market Response and U.S. Performance
The positive sentiment from Japan rippled through other Asian markets. In the U.S., stocks drifted higher on Monday, though gains were more modest. The S&P 500 saw incremental increases, building on stability in gold, silver, and bitcoin. The relatively restrained movement in U.S. Markets suggests investors are cautiously optimistic, monitoring the developments in Japan and awaiting further economic data.
Expert Commentary and Economic Outlook
Sree Kochugovindan, senior research economist at Aberdeen Investments, suggested that Takaichi’s victory represents the “best outcome” for markets in the medium term. He anticipates that strategic investments and tax reform will further bolster Japanese equities. Crédit Agricole CIB echoed this sentiment, noting that the administration now has stronger momentum to pursue a major shift toward proactive fiscal policy.
However, the rally in Japanese markets is not without risk. Experts caution about potential currency risk associated with the expected weakening of the yen. A significantly weaker yen could increase import costs and potentially fuel inflation, requiring careful management by the Bank of Japan.
Political Reactions and Global Implications
The political impact of Takaichi’s win extends beyond Japan. U.S. President Donald Trump congratulated Takaichi on her victory via a post on TruthSocial, signaling continued engagement between the two nations. This suggests a potential for strengthened economic ties and coordinated policy efforts.
The election results and subsequent market reactions highlight the growing importance of political stability and growth-oriented policies in driving investor confidence. Takaichi’s landslide victory provides a clear signal of policy direction, which has, at least initially, been positively received by markets. The coming months will be crucial in determining whether these policies translate into sustained economic growth and market gains.
The situation warrants continued monitoring, particularly regarding the yen’s performance and the potential for inflationary pressures. The “Takaichi trade” represents a significant shift in market sentiment, and its long-term implications remain to be seen. Investors will be closely watching for further policy announcements and economic data releases to assess the sustainability of the current rally.
