Japan Stocks Hit Record Highs as Takaichi’s LDP Win Drives Yen Past 150

Japan’s equity markets soared to historic levels on Monday after the ruling Liberal Democratic Party (LDP) elected Sanae Takaichi as its new leader, setting her on course to become the nation’s first female prime minister.

The Nikkei 225 surged 4.79%, closing at 47,962.88, while the Topix gained nearly 3%, both marking record highs. The rally was led by strong performances in the real estate, technology, and industrial sectors. Shares of Yaskawa Electric jumped more than 20%, Japan Steel Works rose 14%, and both Mitsubishi Heavy Industries and Kawasaki Heavy Industries climbed over 12%.

Analysts attributed the gains to optimism over Takaichi’s expected “high-pressure economy” policy approach, which is likely to maintain Japan’s accommodative monetary stance. A weekend note from Crédit Agricole CIB projected that the incoming administration would encourage investment through public-private partnerships while leaving room for a modest 25-basis-point rate hike by early 2026.

The yen weakened sharply, sliding 1.72% to briefly breach the ¥150-per-dollar mark before settling near ¥149.97. According to Deutsche Bank, the currency’s decline reflects short-term market adjustments following the political shift, though further weakness is not anticipated.

Bond yields moved higher amid the equity rally. The 30-year yield rose over 10 basis points to 3.26%, while the 20-year yield climbed to 2.67%. The benchmark 10-year yield remained steady at around 1.66%.

Outside Japan, Asia-Pacific markets were mixed. Australia’s ASX 200 added 0.19%, while Hong Kong’s Hang Seng Index slipped 0.22% and the Hang Seng Tech Index fell 0.66%. Markets in China and South Korea were closed for holidays.

Takaichi’s leadership marks a historic moment for Japan and signals a potential shift in economic priorities. Investors appear encouraged by the promise of continuity in fiscal stimulus, even as concerns remain over currency stability and inflation pressures.