Japan’s stock market recently experienced a significant surge following the election of Sanae Takaichi as the leader of the Liberal Democratic Party (LDP). This vote, which took place on October 4, 2025, marks a historic moment as Takaichi becomes the first female leader of the LDP. Analysts anticipate that her leadership may position her as Japan’s first female prime minister.
Record Highs for Japan’s Nikkei 225 Index
The Nikkei 225 index rose over 4%, reaching a record high on October 6, 2025. This increase is attributed to optimistic investor sentiment after Takaichi’s election, with notable gains in sectors such as real estate, technology, and consumer cyclicals.
- Japan Steel Works: up 13%
- Mitsubishi Heavy Industries: up 11%
- Kawasaki Heavy Industries: up 10.47%
Takaichi’s Economic Policies and Their Impact
As the new party leader, Takaichi is expected to encourage the Bank of Japan to continue its supportive monetary policies. According to a note from Crédit Agricole CIB, she might also be open to implementing a rate hike of 25 basis points by January 2026. This potential shift in policy aims to stimulate Japan’s economy, recognizing its ongoing fragility.
Investment and demand expansion through public-private partnerships will likely be central to her agenda.
Market Reactions and Other Indicators
In addition to the Nikkei’s performance, the Topix index also rose by over 3%, achieving an all-time high. However, the Japanese yen depreciated by 1.45%, trading at 149.59 against the U.S. dollar. Other financial indicators include:
| Bond Type | Yield Change |
|---|---|
| 30-Year Bond | +10 basis points to 3.263% |
| 20-Year Bond | +6 basis points to 2.674% |
| 10-Year Bond | Stable around 1.659% |
Meanwhile, other global markets showed mixed results. Australia’s ASX/S&P 200 rose by 0.19%, while Hong Kong’s Hang Seng Index futures were slightly higher. Chinese and South Korean markets were closed for holidays, and in the U.S., major stock averages finished higher despite ongoing challenges, including a government shutdown.
Conclusion
As Japan embraces this transformative leadership change, investors are hopeful for a new direction in economic policy under Takaichi. With her background and proposed strategies, the future of Japan’s financial landscape will be closely observed in the coming months.
