Markets reacted sharply on Monday after Sanae Takaichi, a fiscal and monetary dove, was elected as the new leader of Japan’s ruling Liberal Democratic Party (LDP), putting her on track to become the country’s first female prime minister. Her victory drove Japan’s Nikkei index up by more than 4% to an all-time high, while the yen slid against the U.S. dollar amid expectations of continued easy policy and potential fiscal stimulus.
- Nikkei 225: Jumped as much as 4.3% to a record 47,734.04, reflecting investor optimism for pro-growth policies.
- Yen: Weakened 1.6% to nearly 150 per U.S. dollar, while short-term Japanese bond yields fell as traders dialed back bets on Bank of Japan rate hikes.
- Gold: Hit a record high above $3,900, with investors seeking safe havens amid U.S. government shutdown concerns.
- Bitcoin: Soared to an all-time high of $125,653 on Sunday before easing slightly, signaling renewed demand for alternative assets.
- Oil: Prices edged higher after OPEC+ announced another modest 137,000 bpd production increase for November.
The market rally underscores how political shifts in Japan can influence global investor sentiment.
Takaichi’s reputation as a policy dove has reassured markets of a continuation of accommodative monetary policy, boosting equities while pressuring the yen.
Meanwhile, bitcoin and gold gains reflect investor anxiety over U.S. fiscal stability, with the ongoing government shutdown prompting a flight to alternative stores of value.
The main players driving and reacting to these shifts include Sanae Takaichi, whose policy direction will shape Japan’s fiscal and monetary trajectory, and the Bank of Japan (BOJ), which faces renewed pressure to maintain its cautious approach to policy normalization. Investors across Asia and beyond are closely watching for signals of future economic measures, while OPEC+ continues to influence energy markets through its production strategy. Additionally, the U.S. government’s fiscal uncertainty and its impact on global sentiment have made alternative assets like gold and bitcoin key beneficiaries of investor anxiety.
Analysts expect Japan’s stimulus-friendly stance to support equities in the short term but warn of long-term pressure on the yen. Global markets will be watching Takaichi’s cabinet picks and her coordination with the BOJ for signals of future policy shifts.
In the U.S., prolonged fiscal instability could continue to fuel the rise of digital and alternative assets, with Standard Chartered predicting bitcoin could reach $135,000 if the shutdown persists.
With information from Reuters.
