Japan’s Nikkei 225 index surged past the 50,000-point mark for the first time in history today, driven by investor optimism surrounding new Prime Minister Sanae Takaichi’s pledge for aggressive fiscal stimulus.
The benchmark index reached an intraday high of 50,491.23 points, an increase of 2.4%, before closing its morning session up 2.1% at 50,337.36 points. This rally brings the Nikkei’s year-to-date return to 26%.
The broader Topix index also climbed to an all-time high, rising nearly 1.6% to 3,321.48 points by midday, with a year-to-date gain of 19.3%.
Hiroyuki Ueno, chief strategist at Sumitomo Mitsui Trust Asset Management, attributed the gains to market expectations. “The rise in the Nikkei is supported by expectations for the Takaichi government, which has growth-focused policies,” Ueno stated.
He noted that the market continued its upward trajectory even after a brief downturn following Takaichi’s election, as investors who had missed earlier rallies capitalized on the dips.
Leading the Nikkei’s ascent were chip testing equipment manufacturer Advantest, with its stock price jumping 5.15%, and Fast Retailing, owner of the Uniqlo brand, which saw a 2.73% increase.
The historic milestone follows Takaichi’s parliamentary confirmation as prime minister last Tuesday. She has promised an expansive stimulus package valued at over 13.9 trillion Japanese Yen, approximately $93 billion USD.
Nishihiro Yamaguchi, chief economist for Japan at Oxford Economics, remarked that fiscal measures typically receive a positive market response, irrespective of their eventual economic impact.
Takaichi, who succeeded Shigeru Ishiba, is a proponent of “Abenomics,” the stimulus policies championed by former Prime Minister Shinzo Abe. Her appointment signals a continuation of growth-oriented economic strategies.
The new Prime Minister is scheduled to meet U.S. President Donald Trump later on Monday, with a bilateral summit slated for Tuesday.