Japanese Stock Market Soars to Record Highs After Landmark Election Result
Japanese equities surged dramatically on Monday, reaching their highest levels since April, following a decisive election victory for Prime Minister Sanae Takaichi. This significant political outcome has ignited investor optimism regarding substantial government investment in key economic sectors, propelling the market to unprecedented heights.
Market Indices and Key Performers
The benchmark Nikkei 225 index experienced a remarkable ascent, climbing as much as 5.7% to achieve a new record of 57,337.07. Simultaneously, the broader Topix index advanced robustly, gaining up to 3.4% to establish a fresh peak. The rally was predominantly fueled by substantial gains in technology and machinery stocks, with numerous chip-equipment manufacturers witnessing jumps exceeding 10%.
In the currency markets, the Japanese yen strengthened, reaching 156.88 against the US dollar. Concurrently, yields on Japanese government bonds saw notable increases. The 10-year JGB yields rose by nearly 4 basis points to 2.274%, while the 20-year JGB yields increased by approximately 3 basis points to 3.158%.
Political Mandate Driving Market Optimism
Prime Minister Takaichi's ruling coalition secured a commanding majority in Sunday's lower-house election, providing her with a powerful mandate to implement expansive fiscal policies. These anticipated measures have already catalyzed Japanese stocks to record levels, with sectors specifically targeted by her strategic spending initiatives—including artificial intelligence, semiconductors, quantum computing, and defense—leading the market gains on Monday.
According to financial experts cited by Bloomberg, financial stocks are poised to outperform due to higher long-term bond yields. Additionally, food-related shares are expected to benefit from Takaichi's election pledge to temporarily reduce the consumption tax on food items.
Sector-Specific Surges and International Reactions
Defense companies exhibited particularly strong performance, with Mitsubishi Heavy, Kawasaki Heavy Industries Ltd., and IHI Corp. recording significant gains. IHI notably rose up to 7.2%. Satellite operator Sky Perfect JSAT Holdings emerged as one of the top performers on the Topix index. Real estate and construction stocks, which are also anticipated to gain from the new government's policies, demonstrated solid performance throughout the trading session.
Internationally, U.S. President Donald Trump extended his congratulations to Prime Minister Takaichi via a post on TruthSocial. "She is a highly respected and very popular Leader. Sanae's bold and wise decision to call for an Election paid off big time. The wonderful people of Japan, who voted with such enthusiasm, will always have my strong support," Trump stated.
Broader Asian Market Performance
Other Asian markets also experienced positive momentum on Monday, February 9. South Korea's Kospi surged impressively by 4.15%, while the small-cap Kosdaq rose 2.97%. Australia's S&P/ASX 200 climbed 1.65% during early trading sessions. Meanwhile, Hong Kong's Hang Seng Index futures indicated upward movement, standing at 27,053 compared to the index's previous close of 26,559.95.
Recent U.S. Market Context
On the preceding Friday, U.S. stocks rallied significantly as technology shares rebounded following several days of substantial losses. Bitcoin also recovered from a drop exceeding 50% from its October peak last year. The Dow Jones Industrial Average surged 1,206.95 points, or 2.47%, closing at 50,115.67—marking its first-ever close above the 50,000 threshold. The S&P 500 rose 1.97% to finish at 6,932.30, while the Nasdaq Composite gained 2.18%, ending at 23,031.21. These gains successfully pushed the S&P 500 back into positive territory for the year 2026.
Disclaimer: This article is intended for educational purposes only. Readers are advised to consult with a qualified investment advisor before making any financial decisions.
