Japan’s stock market rallied sharply on Monday, February 9, with the benchmark Nikkei 225 surging to record highs, driven primarily by political clarity, policy optimism, and strong sectoral buying.
Historic election victory boosts market confidence
The biggest trigger behind today’s rally was the landmark election victory of Prime Minister Sanae Takaichi. Her ruling Liberal Democratic Party secured a two-thirds supermajority in the lower house, according to NHK.
This decisive mandate has removed political uncertainty and given markets confidence that the government can push through fiscal reforms, higher public spending, and tax measures without resistance.
“Takaichi trade” drives fresh buying
Japanese equities have been rallying for months on what traders call the “Takaichi trade”. Investors expect her administration to continue a growth-focused version of Abenomics, including looser monetary policy, proactive fiscal spending, and support for domestic industries.
Markets view this policy mix as equity-friendly, especially for cyclical and domestic sectors.
Sector-wide rally lifts the index
The rally was broad-based. Real estate stocks jumped over 7%, leading gains as expectations of supportive fiscal and monetary conditions improved outlooks for asset-heavy businesses. Healthcare and industrial stocks also saw strong buying interest, while technology-linked names benefited from renewed risk appetite.
Among individual stocks, CyberAgent Inc surged more than 16%, Advantest climbed over 12%, and Sumitomo Electric Industries rose more than 11%, highlighting strong participation across sectors.
Policy certainty outweighs currency moves
Although the yen strengthened to around 156.9 per dollar, equities continued to rally, suggesting that policy certainty and growth expectations outweighed currency concerns. Bond yields also moved higher, reflecting expectations of more active fiscal policy under the new mandate.
What markets are pricing in
Analysts believe the rally reflects expectations of:
- Faster decision-making due to political stability
- Higher government spending and strategic investments
- Continued support for corporate profitability and capital markets
As noted by market participants, a decisive mandate for Takaichi is being viewed as the best-case scenario for Japanese equities in the medium term.
Bottom line
Japan’s Nikkei is up today because investors are pricing in political stability, pro-growth economic policies, and sector-wide earnings optimism following Prime Minister Sanae Takaichi’s historic election victory. The rally reflects confidence that Japan’s equity-friendly policy environment will remain intact — and possibly strengthen — in the months ahead.
