Takaichi's Fiscal Expansion Pledge Fuels Market Rally
Rise in U.S. Tech Stocks Also Contributes... Yen-Dollar Rate at 150.5
The Nikkei 225, Japan's benchmark stock index, set new intraday record highs for the second consecutive day.
On October 7, the Nikkei 225 started the morning with gains, reaching 48,527 at one point. The previous day's closing price was 47,944.
This rally in the Nikkei 225 is attributed to Sanae Takaichi, the ruling Liberal Democratic Party leader who is expected to become Prime Minister in mid-October, pledging fiscal expansion.
Sanae Takaichi, who won the Liberal Democratic Party leadership election on October 4, is expected to succeed the economic policies of former Prime Minister Shinzo Abe, known as "Abenomics," which focus on large-scale quantitative easing, increased fiscal spending, and structural reforms.
As a result, there is growing speculation that the Bank of Japan, the country's central bank, will find it difficult to raise its key interest rate in the near future. This has led to a decline in the value of the yen and a bullish trend in the stock market.
The Nihon Keizai Shimbun reported that after Shigeru Ishiba was elected Liberal Democratic Party leader in September last year, the Nikkei 225 dropped by 4.8% on the first trading day. In contrast, following Sanae Takaichi's election, the index surged by 4.8% on the first trading day after her victory.
Additionally, the rise in U.S. technology stocks on October 6 (local time) is also seen as a contributing factor to the gains in the Japanese stock market.
The yen-dollar exchange rate rose to the 150-yen range for the first time in about two months on the previous day, and as of 9:35 a.m. on October 7, it was holding at around 150.5 yen.
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