Japan’s stock market hit a historic milestone on Monday as the Nikkei 225 closed above the 50,000 mark for the first time, buoyed by robust investor optimism over anticipated stimulus under new Prime Minister Sanae Takaichi’s leadership.
The Nikkei surged 2.46% to close at 50,512.32, extending this year’s rally to 26.6%. The broader Topix index also ended at a record 3,325.05, up 1.7% on the day and 19.4% for the year.
The gains follow Takaichi’s recent ascent, marking her as Japan’s first female prime minister—a transition that has injected confidence into the markets. Since her election last week, the Nikkei has added 2.5%, with investors betting on bold fiscal stimulus and stability.
Investor appetite was further spurred by strong earnings and optimism over the U.S. AI-related companies such as Nvidia. Technology giants propelled the index higher, with SoftBank Group rallying 6.66% to provide the biggest lift to the Nikkei on Monday. Advantest, key chip-testing equipment supplier to Nvidia, jumped 6.53%, while data center optical fiber maker Fujikura advanced nearly 8%.
The rally follows decades of stagnation for Japanese equities, with the Nikkei only recently reclaiming its 1989 Bubble Economy peak in February 2024 after a 34-year wait.
Momentum has accelerated since mid-July, when a heavy electoral loss for the Liberal Democratic Party triggered speculation over the resignation of former Prime Minister Shigeru Ishiba, a fiscal hawk. Ishiba’s September decision to step down paved the way for Takaichi, a known proponent of the late Shinzo Abe’s “Abenomics” stimulus agenda.
The Nikkei broke past the 45,000 level in September and has powered through subsequent milestones at an increasingly rapid pace. The meteoric rise intensified last week as Takaichi won parliamentary backing and announced her intention to pursue aggressive economic stimulus, including a prospective package exceeding JPY 13.9 trillion ($92.2 billion).
Market participants are also looking ahead to a summit between Prime Minister Takaichi and U.S. President Donald Trump, scheduled for Tuesday following an initial call over the weekend—a meeting anticipated to further influence sentiment.
