Japan’s Markets Surge on Takaichi’s Landslide Victory: What’s Next?
Tokyo’s stock market experienced a significant rally on Monday, February 9, 2026, following Prime Minister Sanae Takaichi’s Liberal Democratic Party’s (LDP) decisive win in Sunday’s general election. The Nikkei 225 closed up 3.88% at 56,363.94 points, having earlier surpassed the 57,000 mark for the first time. The broader Topix index also reached a record high, gaining 2.29% to close at 3,783.57 points.
A Mandate for Economic Policy
Takaichi’s victory, securing a two-thirds “supermajority” in the lower house, provides her government with greater freedom to pursue its economic agenda. Analysts suggest this win gives Takaichi the mandate needed for ambitious public spending plans, boosting market confidence. The LDP and its coalition partner now hold approximately 352 of the 465 seats in parliament.
Tax Cuts and Fiscal Policy
The Prime Minister has pledged a “responsible and proactive” fiscal policy, including a proposed exemption of food products from the 8% consumption tax for two years. While this move has raised concerns about potential budget deficits, This proves expected to stimulate household consumption. Tokyo is preparing a record budget for the fiscal year 2026, following a substantial stimulus package in late 2025.
Market Reactions: Yen, Bonds and Tech
Despite initial concerns about fiscal expansion, the Japanese yen strengthened slightly, reaching 156.33 yen against the dollar. This stability is attributed to Takaichi’s reaffirmed commitment to fiscal sustainability and comments from the Minister of Finance. Still, the Japanese bond market reacted nervously, with the yield on 30-year government bonds rising to 3.579%.
The technology sector led the gains, mirroring a positive trend from Wall Street. South Korean chipmakers SK Hynix and Samsung Electronics saw significant increases, fueled by expectations surrounding the production of HBM4 memory chips for artificial intelligence infrastructure. Bitcoin also stabilized around $70,500 following recent declines.
Regional Impact and Broader Asian Markets
The positive sentiment extended across Asia, with Seoul’s stock market soaring 4.10%. Taipei, Sydney, and Hong Kong also experienced gains. Thailand’s stock market rose by over 3% following an unexpected victory for the conservative party led by Prime Minister Anutin Charnvirakul, signaling potential political stability.
Commodity Trends
Precious metals experienced a rebound, with gold gaining 1.36% and silver jumping 5.21%. Conversely, the oil market weakened amid ongoing discussions between Iran and the United States. WTI crude oil fell 1.02% to $62.90 per barrel, and Brent crude declined 1.01% to $67.36 per barrel.
What Does This Mean for Investors?
The “Takaichi trade,” characterized by expectations of growth-focused economic policies and a looser monetary policy, continues to drive Japanese equities. Investors are anticipating benefits for sectors like defense contractors and food makers, particularly if the consumption tax cut is implemented. The potential for increased government spending and strategic investments is also attracting attention.
Pro Tip:
Preserve a close watch on the yen’s performance. While currently stable, fluctuations could impact the profitability of Japanese exports and influence broader market sentiment.
FAQ
Q: What caused the surge in the Nikkei 225?
A: The surge was primarily driven by Prime Minister Takaichi’s landslide election victory and the expectation of increased government spending and economic reforms.
Q: How will the consumption tax cut affect the Japanese economy?
A: The tax cut is intended to stimulate household consumption, but it also raises concerns about potential budget deficits.
Q: What is the outlook for the Japanese yen?
A: The yen has shown initial stability, but its future performance will depend on factors like monetary policy and global economic conditions.
Q: Which sectors are expected to benefit from Takaichi’s policies?
A: Sectors like defense, food, and technology are anticipated to benefit from increased investment and economic stimulus.
Did you know? U.S. Treasury Secretary Scott Bessent described Takaichi as a “great ally” with a “great relationship” with U.S. President Donald Trump.
Stay informed about the evolving economic landscape in Japan. Explore our other articles on global market trends and Asian economic policy for further insights.
