Nikkei Hits Record High After Takaichi Secures Historic Supermajority

The LDP secured a two-thirds majority in the lower house, granting Takaichi a powerful mandate to overhaul Japan's economic trajectory. This historic win has cleared the path for a policy shift focused on long-term growth through massive state-backed projects. Masayuki Kubota, chief strategist at Rakuten Securities, noted that the victory ensures a push for aggressive growth strategies, which may heighten inflationary pressures and drive further equity investment.

The Nikkei Stock Average reached a record 56,363.94, with the technology and industrial sectors leading the charge. Market heavyweights saw significant gains:

• Chip-testing firm Advantest surged 12%.
• Hitachi Ltd. climbed 8.4%.
• SoftBank Group rose 6.3%.

Strategic Spending and Global Relations

Takaichi’s administration plans to prioritize defense and high-tech sectors, including artificial intelligence, quantum computing, and nuclear fusion. To fund these ambitions, the Prime Minister intends to move away from supplementary budgets in favor of multi-year strategic planning while targeting a reduction in the national debt-to-GDP ratio. Analysts at Morningstar DBRS also suggest the administration may temporarily suspend consumption taxes on food to alleviate cost-of-living pressures for households.

Despite the fiscal spending plans, the Japanese yen strengthened to 156.50 per dollar. Elias Haddad of Brown Brothers Harriman attributed this to a favorable mix of loose fiscal and tighter monetary policy. However, the administration faces looming diplomatic hurdles. Morningstar DBRS analysts warned that Takaichi must navigate a constructive economic relationship with China, Japan’s largest trading partner, amid deteriorating bilateral ties since she took office in October.