Defense Stocks Rise on Takaichi's Constitutional Push... Nikkei Closes at Record High for Second Day

TOPIX Also Hits Record High
Mitsubishi Heavy Industries and Furukawa Electric Surge
Nikkei Analyzes: "Follow-Up Buying Sentiment Triggered"

The Nikkei 225 index, which is centered on major Japanese export stocks, set a new all-time closing high for the second consecutive day on the 10th.

On this day, the index closed at 57,650.54, up 1,286.60 points (2.28%) from the previous day's close. At one point during intraday trading, it jumped to as high as 57,960, surpassing the intraday record high set the previous day. The Tokyo Stock Price Index (TOPIX), Japan's broad market index, also rose 1.90% to 3,855.28, marking a new all-time high. As the landslide victory of the Liberal Democratic Party increased the likelihood that Prime Minister Sanae Takaichi will push for constitutional revision, buying was concentrated in defense stocks.

A pedestrian walks past an electronic board displaying the Nikkei 225 at the Tokyo Stock Exchange on the 10th. Tokyo (Japan)=AFP Yonhap News.

The share price of Mitsubishi Heavy Industries, a leading defense stock, continued its upward trend, surpassing 5,110.0 on the day after hitting an all-time high of 5,074.0 the previous day. Furukawa Electric, which possesses laser weapon technology, also hit the daily upper limit for the second consecutive day.

Improved corporate earnings also provided support. Furukawa Electric announced the previous day that it had revised upward its net profit forecast for the fiscal year ending March 2026 (April 2025 to March 2026) to 18 billion yen (168.9 billion won), saying this would represent a 62% increase from the previous year. The Nikkei analyzed, "In addition to expectations for the Takaichi administration, strong corporate earnings appear to have fueled momentum for follow-up buying."

Stocks related to sectors for which the Takaichi administration has pledged active fiscal spending also showed strength. Shares in 17 strategic areas, including artificial intelligence (AI), the "National Resilience" policy aimed at preparing for large-scale natural disasters, and cybersecurity, benefited. Goyo Construction, grouped as a National Resilience policy stock, is trading at 2,112.0, up 9.40% from the previous session. The fact that the company has extensive experience in defense-related construction, such as strengthening Self-Defense Forces port facilities, also had an impact.

SoftBank Group also soared as much as 11.95% intraday, hitting its highest level in two months. In addition to the strength of large technology stocks such as Oracle in the U.S. stock market, investor sentiment was buoyed by news that monthly users of ChatGPT, a key investment destination through OpenAI, had increased. However, as profit-taking continued, the stock ended the session down 0.52% from the previous day.

The Nikkei pointed out that, despite the uptrend, there are signs of a shift in the attitude of individual investors who had been opting for inverse products. Buy orders for the "NEXT FUNDS Nikkei 225 Double Inverse Index Exchange Traded Fund (ETF)," which seeks double the return when the Nikkei index falls, are reported to have decreased by 12% compared with the end of October last year. The Nikkei added, "The sustainability of the stock price rally depends on the administration's specific policies and its ability to execute them."