The Japanese shares have witnessed a strong winning streak for the second session straight. Continuing on its new record rally, Japan's Nikkei 225 index touched yet another fresh all-time high of 48,527.33 on October 7th. The Topix index also saw significant buying sentiment. The reason behind the latest rally in Japanese shares is due to hopes of a new prime minister. Sanae Takaichi's liberal party has swept Japan's election victoriously and is likely to become the first female PM of this country. She is called the 'Iron Lady' of Japan.
Japanese Stocks:
At the time of writing, the Nikkei 225 index climbed by 381.23 points or 0.8%, to trade at 48,325.99. The mainboard benchmark skyrocketed by a whopping 582.57 points in the early trade of October 7th and touched a new all-time high of 48,527.33. In the past five sessions, Nikkei has zoomed by nearly 8% due to the strong rally. YTD, the index gained nearly 23%.
Stocks like Advantest, SoftBank Group, Disco Corp, Lasertec, and Tokyo Electron gained by 1% to 3%, emerging among top performers.
Meantime, the Tokyo Stock Price Index or TOPIX climbed by 11 points or 0.34% to trade at 3,237.10. The index also touched a new all-time high of 3,248.39. In past five sessions, TOPIX has advanced nearly 4%. While its YTD gains is a whopping 17.5% as of now.
However, on the other hand, the Japanese currency Yen weakened to trade at 150.5 against US dollar, marking its lowest level in over 2 months.
What Is Impacting Japanese Market?
The fiscal dove and pro-stimulus lawmaker Sanae Takaichi won the ruling Liberal Democratic Party leadership race over the weekend, paving the way for her to become the next prime minister. Her victory fueled expectations of large-scale fiscal spending and continued monetary accommodation, as per Trading Economics.
She is expected to urge the Bank of Japan to maintain its ultra-loose monetary stance, which impacted the performance of Yen but bolstered the trend in Japanese stocks.
The Trading Economics data also highlighted that Bank of Japan Governor Kazuo Ueda reiterated Friday that the central bank would resume rate hikes if growth and inflation progress as projected. Ueda also warned that US tariffs are squeezing exporters' profits, especially in the auto sector, though broader effects on investment, employment, and wages remain contained. On the data front, Japan's household spending rose 2.3% in August, beating forecasts and marking the fastest growth in three months, supported by government measures to ease cost pressures and offset the impact of US tariffs.
Japan 2025 Liberal Democratic Party presidential election:
After the incumbent LDP President and Prime Minister Shigeru Ishiba announced his resignation on October 7th, the 2025 Liberal Democratic Party presidential election was held on 4 October 2025. Among the five candidates that run for the election were --- former Minister of State for Economic Security Sanae Takaichi, Agricultural Minister Shinjirō Koizumi, Chief Cabinet Secretary Yoshimasa Hayashi, former Economic Minister Takayuki Kobayashi and former Foreign Minister Toshimitsu Motegi.
During the first round of voting, Takaichi took lead with 31.07% of the vote, followed by Koizumi in second place with 27.84% of the vote. The two faced off in the runoff, where Takaichi garnered 54.25% of the vote against Koizumi. This led Takaichi to become the new president of the Liberal Democratic Party. Takaichi is expected to be become the new PM of Japan. If confirmed in an extraordinary session on October 15th by the National Diet, Takaichi will become the first woman PM of Japan.
Who Is Sanae Takaichi?
Born and raised in Nara, Takaichi graduated from Kobe University and worked as an author, legislative aide, and broadcaster before beginning her political career. Elected as an independent to the House of Representatives in 1993, she joined the Liberal Democratic Party (LDP) in 1996. A protégé of Abe, Takaichi held various positions during his premiership, most notably as Minister for Internal Affairs and Communications. She was a candidate in the 2021 LDP leadership election, but was eliminated before the runoff, placing third, as per Wikipedia.
From 2022 to 2024 during Fumio Kishida's premiership, she served as Minister of State for Economic Security. Takaichi also made her second run for the party leadership in 2024, where she came in first in the first round but narrowly lost in a runoff to Shigeru Ishiba. She ran again in 2025 and placed first in both rounds of voting, becoming party president and defeating Shinjiro Koizumi, the data added.
Nikkei 225 At 50,000 Soon?
The yen fell to 150 against the dollar and a further drop would increase the likelihood of the Nikkei reaching 50,000, considering the impact of a weaker currency on corporate earnings, as per Makoto Sengoku, senior equity market analyst at Tokai Tokyo Intelligence Laboratory Co, who said to Japan Today. However, some analysts have mixed opinion. Some analysts believe that the sustainability of rally in Japanese shares may not last long due to lack of clarity in the ruling coalition and cooperation with other parties for implementing policies and measures.
Goldman Sachs in its report also pointed out that Takaichi's election as LDP President this weekend presents upside risks to long-end JGB yields. It added, "While our economists don't think a significant boost in fiscal spending is imminent, markets are nonetheless likely to reevaluate the risks around the fiscal outlook."
Still, Goldman believes that 10-15 basis points of upward pressure on 30y yields is a plausible initial response, with scope for additional steepening if the market pushes back its expectations for Bank of Japan hikes.
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