Japan's Nikkei average surpassed 58,000 for the first time following the Liberal Democratic Party's landslide election victory. Expectations for Prime Minister Sanae Takaichi's economic stimulus measures are driving the market, though fiscal concerns linger.
On February 12, 2026, Tokyo's stock market saw the Nikkei 225 index climb to a high of 58,015.08, breaking the 58,000 mark for the first time. It traded 0.4% higher at 57,874.61 midday, marking a 15% surge so far in 2026. The Topix index rose 0.8% to 3,884.16. This follows the Liberal Democratic Party's gain of 316 seats in the House of Representatives election on February 8, securing more than a two-thirds majority in the lower house. Prime Minister Sanae Takaichi, Japan's first female premier since October, campaigned on economic stimulus, fueling the 'Takaichi trade' that has driven shares to records while pressuring government bonds and the yen lower.
Wataru Akiyama, a strategist at Nomura Securities, said, 'Following recent strong earnings results and the LDP’s landslide victory under the Takaichi administration, the market has been on a significant upward trend. The sense of overheating seems to be intensifying, so profit-taking movements could emerge from here on.' Honda Motor shares fell 3% after a 61% drop in third-quarter profit. Shiseido gained 14%, while Mitsui Kinzoku, an AI sector supplier, rose 11%.
In a Monday press conference, Takaichi positioned a zero consumption tax on food as a two-year stopgap measure and the 'tax credits with cash payments' system as the core of reforms to ease burdens on middle- and low-income earners. To cover the ¥5 trillion annual tax revenue loss, she ruled out deficit-covering bonds, opting for nontax revenue increases and subsidy reviews. Finance Minister Satsuki Katayama stated, 'We will find the best way to realize our plan as soon as possible.' However, bond yields spiked to decades-high levels last month amid fears of added public debt from spending on defense and strategic industries. Takaichi stressed her 'responsible proactive fiscal policy' and the need to break from excessive austerity.
Debates on constitutional revision are expected to revive, with the LDP eyeing a bill for national referendum based on its 2018 four-point draft, including Self-Defense Forces status. Plans include bills for a national intelligence agency and a CFIUS-like body to screen foreign investments. While markets welcome stimulus, wariness persists over fiscal sustainability.
