Goldman Sachs' Sanae's overwhelming victory sparks expansionary fiscal expectations! The Nikkei 225 rises above 57,000 points for the first time

The Nikkei Stock Average surged on Monday, marking a strong rebound in the Tokyo stock market. Prime Minister Sanae Takaichi’s historic victory in Sunday’s general election has fueled market expectations for increased government spending on key industries such as defense and artificial intelligence.

As of press time, the Nikkei 225 benchmark index soared by 4.2%, reaching a new all-time high; the index’s gain expanded to 5.15%, surpassing 57,000 points for the first time in history. SoftBank Group’s stock rose by 8.5%, the largest increase since January 28. The broader TOPIX index also climbed by up to 2.6%, hitting a new peak. The electronics and banking sectors led the market rally.

The ruling coalition led by Sanae Takaichi secured an overwhelming majority in the House of Representatives election on Sunday, providing her with stronger authorization to implement expansionary fiscal policies. Previously, such policies had helped push Japan’s stock market to record highs. Her campaign promise to temporarily cut the food consumption tax has also boosted retail sector stocks in recent weeks.

Andrew Jackson, Head of Japan Equity Strategy at Ortus Advisors, wrote in a briefing that Sanae Takaichi’s victory “far exceeded” initial expectations and “has the potential to open the floodgates for her expansionary policies.”

He expects that, due to her commitment to increase defense spending, defense-related stocks such as Mitsubishi Heavy Industries will have room to rise, along with aerospace-related concepts, financial stocks, and food-related shares.