Nikkei Surges Past 54,000 to Fresh Record on Election Speculation and Weak Yen

TOKYO: Japan’s Nikkei share average climbed to a new all-time high on Wednesday, driven by expectations of continued policy support and a weaker yen that boosted exporter-heavy stocks.

The benchmark Nikkei rose 1.3% to 54,219.24 as of 0049 GMT, marking the first time it crossed the 54,000 level. The index extended gains after jumping 3% in the previous session, following reports that Prime Minister Sanae Takaichi may dissolve parliament this month and call a snap general election in February.

Investors are increasingly optimistic that an early election could pave the way for additional fiscal stimulus, supporting economic growth and corporate earnings.

The broader Topix index also touched a record high, rising 0.6% to 3,620.22.

A sharp decline in the yen since late last week further lifted market sentiment, as a weaker currency enhances the value of overseas earnings for Japan’s major exporters. The yen slid to its weakest level since July 2024 on Tuesday and was last trading flat at around 159.2 per U.S. dollar.

Among individual stocks, chip-testing equipment maker Advantest surged 5%, while chipmaking equipment supplier Tokyo Electron gained 1.93%. Fast Retailing, the owner of the Uniqlo brand, advanced 3%.

“The expectation of an early election continued to support local equities, while the weaker yen also boosted appetite for stocks,” said Shuutarou Yasuda, a market analyst at Tokai Tokyo Intelligence Laboratory. He added that some investors took profits after the sharp rally in the previous session.

Automaker Toyota Motor slipped 1.35% after posting a 7.5% gain on Tuesday, while SoftBank Group fell 3%, becoming the biggest drag on the Nikkei.

The rally underscores growing investor confidence in Japan’s equity market amid supportive policy expectations and favorable currency movements, despite some near-term profit-taking.