Japanese index Nikkei 225 jumped on Monday by more than 4% and reached a record level after the ruling Liberal Democratic Party chose a firm conservative Sanae Takaichi for his new leader, which positioned her as the first prime minister in the country.
Early increase was led by the growth of the shares of real estate, technology and consumer cyclic shares. Yaskawa Electric Corpk jumped more than 20%, while Japan Steel Works rose by 14%. Mitsubishi Heavy Industries and Kawasaki Heavy Industries added 13% and 12%.
Given the Government’s High Pressure Economics, Takaichi will probably request the Bank of Japan, written by Crédit Agricole Politika, written over the weekend, adding to an increase in interest rates of 25 BOJ by BOJ by January 2026.
“Takaichi administration is expected to recognize that the current economy is still weak, completely change the direction of politics according to the new approach (complete reform), which seeks to expand investment and demand through public-private partnerships,” says Ca-CIB.
Similarly, Topix increased by as much as 3% and reached a record level.
Jen weakened by more than 1.72% and briefly reached a 150 psychological limit in relation to the dollar, before reaching 149.97 for the dollar, reports SEEbiz.
The last time he weakened to the level of 150 in August, according to LSEG data, which caused the concerns of the Japanese Katsunobu Kata Minister. In October 2022. Yen weakened briefly above the 151 border in relation to the dollar, which prompted the intervention of the Ministry of Finance of that country.
“Our basic scenario is a short-term loss of JPY according to 150 as the market adapts to surprise, but not material weakness after that,” he wrote Deutsche Bank in a note published on Monday.
Although the probability of increasing the interest rate by Bank of Japan should fall, the market determined the terminal interest rate only about 1%, which could still be achievable under Takaichi’s leadership.
