Nikkei surges to a record high

The Nikkei 225 surged 4.5% to a record high of 48,004.0 points on Monday

Japanese stocks led gains across Asian markets on Monday, with the Nikkei rising to record highs after Sanae Takichi’s election win fuelled bets on more fiscal spending and stimulus from the government.

A sharp decline in the yen also buoyed Japanese markets. Outside Japan, Asian stocks were mostly down as market holidays in China and South Korea kept trading volumes low. Hong Kong shares dropped on a retreat in technology.

The Nikkei 225 surged 4.5% to a record high of 48,004.0 points on Monday, while the broader TOPIX index gained 3% to a record high of 3,232.12 points.

Industrials were the best performers on the Nikkei, amid bets that Takaichi will push for more fiscal spending on industrialization and defence. Financials lagged on bets of slower interest rate hikes.

Takaichi won leadership of the LDP in a run-off election held over the weekend, and is now poised to become Japan’s first female prime minister. A parliamentary session on the matter is set to convene in mid-October.

Takaichi was viewed as the most dovish among the five front-runners for LDP leadership.

She has called for more fiscal spending and tax relief to prop up what she sees as a fragile Japanese economy, and is widely expected to discourage the Bank of Japan from raising interest rates further.

This notion was a major driver of Monday’s rally, as markets bet on more accommodative and expansionary policies under Takaichi’s prime ministership.

Broader Asian markets kept to a tight range after logging some gains last week.

Hang Seng index was the worst performer in the region, losing 0.5% on a pullback in tech shares.

Among broader Asian markets, Straits Times index added 0.1%, while Australia’s ASX 200 was flat.

Nifty 50 index opened 0.2% higher, coming back in sight of 25,000 points after tumbling from the levels on concerns over the country’s economy.