News of the election of Takaichi Sanae to head Japan’s main ruling Liberal Democratic Party triggered a surge in Tokyo stock prices on Monday. The Nikkei 225 briefly surpassed the 48,000-mark for the first time, and ended the trading day at an all-time high.
The benchmark closed at 47,944, up more than 2,100 points, or 4.7 percent, from Friday.
Investors bought up a wide range of shares on expectations that Takaichi will go easy on fiscal policy.
Currency markets also reacted to the news. The Japanese yen weakened to the 150 level against the dollar, crossing that line for the first time in two months in Tokyo on Monday.
Some investors sold the currency in the belief that the Bank of Japan will push back the timing of the next interest rate hike.
Market sources say Takaichi’s win came as somewhat of a surprise. The news put foreign investors in particular in a bullish mood.
The sources added that stocks may be overheating, given their rapid price rises.
The market will also be moved by decisions on the selection of new party executives and the formation of a new coalition framework.
AloJapan.com