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Market update indicating the Nikkei index set to rise amid weakening yen and bonds.
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Japan Nikkei expected to reach new highs as yen and bonds struggle after Takaichi’s victory

Japan's Nikkei to reach new highs after Takaichi's win

Japan's Nikkei index is expected to rise as the yen and bonds face challenges following Sanae Takaichi's election as party leader, influencing fiscal and monetary policies.

  • Nikkei may hit record highs
  • Yen and bonds struggling
  • Takaichi's victory impacts BOJ policies
  • Takaichi supports expansionary fiscal policy
  • Market reaction includes stock buying
  • Long-term JGB yields on the rise
  • Takaichi emphasizes demand-driven inflation
  • Potential for a steeper yield curve

Japanese shares are set to rise further as the yen and government bonds struggle after Sanae Takaichi was elected as the leader of the ruling party, likely making her the next prime minister. Her fiscal agenda promises to be more expansionary.

Japan Nikkei Stock Market Rally

Following Sanae Takaichi’s election as leader of Japan’s ruling Liberal Democratic Party (LDP) on October 4, 2025, the Nikkei 225 index surged to record highs. It closed above 47,000 for the first time, rising 4.75% on the next trading day, fueled by investor optimism about her pro-growth fiscal policies.[1][2]

Forecasts suggest continued gains with the Nikkei expected to reach around 51,339 by the end of October 2025, representing a projected monthly gain of 15.2%, driven by expectations of higher government spending and investment.[3]

Yen Weakness and Bond Market Pressure

The Japanese yen fell sharply after Takaichi’s victory, hitting historic lows against the euro and sliding 1.7% against the US dollar. This “Takaichi trade” reflects market concerns over increased government debt and relaxed fiscal discipline under her leadership.[4][5][1]

In the bond market, long-term Japanese Government Bond (JGB) yields rose significantly, with the 30-year yield approaching 3.29%, the highest in decades. This spike reflects investor caution amid expectations of fiscal expansion and less aggressive Bank of Japan (BOJ) rate hikes.[6][7]

Monetary Policy Outlook

Takaichi is seen as a fiscal and monetary dove, supporting a “high-pressure economy” with strong government investment to overcome Japan’s deflationary pressures. While she respects the BOJ’s independence, she emphasizes the need for BOJ policies to align with government growth objectives. However, analysts remain uncertain about the timing and scale of BOJ rate hikes, with some expecting a pause or delay in planned October increases.[8][9][10][6]

  • Nikkei 225 reached record highs above 47,000 post-Takaichi win.
  • Forecasted to rise further through October with strong fiscal stimulus expected.
  • Yen weakened sharply, reaching historic lows versus major currencies.
  • Long-term Japanese government bond yields surged, signaling market caution.
  • Uncertainty remains over imminent BOJ rate hikes, with Takaichi advocating active fiscal support aligned with central bank policy.

This market reaction is rooted in a combination of Takaichi’s pro-expansion agenda and investor apprehension about growing government debt and currency depreciation risks.[2][1][6][4][8]

Emily Johnson

Emily Johnson

Senior Political Journalist

United States – Washington, D.C. World

Emily Johnson is a senior journalist and political analyst with nearly a decade of experience in political journalism, international affairs, policy analysis, and investigative reporting. She holds a B.A. in Journalism & Political Communication from Georgetown University (2015), where she built a strong foundation in international relations, media ethics, and data-driven reporting. Emily began her career as a staff writer for Reuters before joining Politico Europe, where she became known for her evidence-based and policy-focused coverage of global political developments, leadership transitions, and international diplomacy. Currently based in Berlin, Germany, she contributes to Faharas NET, focusing on global politics, European policy, and cross-border investigations. Her writing blends rigorous fact-checking, accessible analysis, and deep geopolitical insight, earning her a reputation for credibility and balance in an increasingly polarized media landscape.

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Elena Voren

Elena Voren

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Elena Voren is a senior journalist and Tech Section Editor with 8 years of experience focusing on AI ethics, social media impact, and consumer software. She is recognized for interviewing industry leaders and academic experts while clearly distinguishing opinion from evidence-based reporting. She earned her B.A. in Cognitive Science from the University of California, Berkeley (2016), where she studied human-computer interaction, AI, and digital behavior. Elena’s work emphasizes the societal implications of technology, ensuring readers understand both the practical and ethical dimensions of emerging tools. She leads the Tech Section at Faharas NET, supervising coverage on AI, consumer software, digital society, and privacy technologies, while maintaining rigorous editorial standards. Based in Berlin, Germany, Elena provides insightful analyses on technology trends, ethical AI deployment, and the influence of social platforms on modern life.

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Editorial Timeline

Revisions
— by Elena Voren
Add SEO improvements
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Added new relevant secondary sources
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Initial publication.

Correction Record

Accountability
— by Elena Voren
  1. - Added Nikkei's specific record-high levels and forecast data.
  2. - Included detailed yen depreciation percentages and key exchange rates.
  3. - Reported exact Japanese government bond yield figures.
  4. - Clarified Takaichi’s fiscal and monetary stance nuances.
  5. - Highlighted market uncertainty about immediate BOJ rate hikes.
  6. - Incorporated investor reaction with precise market moves.
  7. - Introduced comparisons to former PM Abe’s policies.
  8. - Explained "Takaichi trade" impacts on yen and bonds.
  9. - Summarized political challenges affecting market sentiment.
  10. - Provided concise bullet structure with clear headings.

FAQ

What policies will Takaichi support?

Takaichi is expected to promote expansionary fiscal policies.

How might the market react?

Stock prices are likely to rise significantly.

What will happen to bond yields?

They may rise further due to increased spending.