Nikkei 225 Hits Intraday Record High on Expectations of Prime Minister Takaichi; Up 2.6%

Financial News Tokyo – With Sanae Takaichi, president of the ruling Liberal Democratic Party (LDP), all but certain to become prime minister on the 21st, the Tokyo stock market surged on the 20th.
As of 10:46 a.m. at the Tokyo Stock Exchange (TSE), the Nikkei 225, Japan's benchmark stock index, was up 2.6% from the previous trading day at 48,818.
With this, the Nikkei 225 surpassed its previous intraday all-time high of 48,597 set on the 9th.
This rally is attributed to the Liberal Democratic Party (LDP) and the Japan Innovation Party virtually agreeing over the weekend to form a coalition government, making Takaichi's election as prime minister in the upcoming vote on the 21st all but certain.
Takaichi has consistently supported 'Abenomics,' known for its monetary easing policies, and advocated for aggressive fiscal expansion during the LDP leadership race.
Nihon Keizai Shimbun (The Nikkei) explained, "Last weekend's rise in the U.S. stock market, expectations for easing U.S.-China trade tensions, and reduced political uncertainty in Japan have all contributed to improved investor sentiment."
The Nikkei 225 had been trending upward even before Takaichi's victory in the LDP leadership election on the 4th, surging to the 47,950 level on the 7th after the election. However, after Komeito, which had been in coalition with the LDP for 26 years, announced its withdrawal on the 10th, political uncertainty led to a decline, with the index dropping to 46,847.
Market participants expect that the so-called 'Takaichi trade'—rising stock prices and falling Japanese yen and government bond values—will be difficult to accelerate after Takaichi becomes prime minister. This is because the Japan Innovation Party, which has joined hands with the LDP, is likely to agree to a coalition in the form of 'external cooperation,' refraining from sending cabinet ministers to the new administration for the time being.
A securities firm official commented, "If the LDP and the Japan Innovation Party only engage in external cooperation, the scale of expansionary fiscal policy may be limited, making it unlikely that the 'Takaichi trade' will accelerate."
Meanwhile, the Japanese yen continued to weaken. As of 10:26 a.m., the USD/JPY exchange rate stood at 150.9 yen per dollar, up 0.82% from the previous trading day.

sjmary@fnnews.com Seo Hye-jin Reporter