Nikkei 225 Targets 60,000 Milestone as Election Victory Fuels Market Optimism

2026-02-12 global

Tokyo, Wednesday, 11 February 2026.
Propelled by Prime Minister Sanae Takaichi’s landslide election victory, Japan’s Nikkei 225 index surged 2.3% on February 10, 2026, closing at 57,650 and setting its sights on the 60,000 threshold. This bullish momentum, termed the “Takaichi Effect,” is underpinned by investor confidence in promised fiscal stimulus and tax reforms. Perhaps the most intriguing development is the market’s decoupling from currency trends; equities rallied even as the Yen strengthened to 155.24 against the dollar, a scenario that typically dampens Japan’s export-heavy index. This shift suggests a structural re-rating of the Japanese economy, with domestic demand stocks now outperforming traditional exporters. As 30-year JGB yields climb above 3.5%, capital flows indicate a profound renewed interest in Japanese assets.

The “Takaichi Effect” and Sector Rotation

The market’s enthusiastic response follows the February 8, 2026, snap election, where Prime Minister Sanae Takaichi’s coalition secured a commanding 316 seats in the 465-seat lower house [1]. This decisive mandate has paved the way for an aggressive fiscal agenda, including pledges to increase spending and suspend food taxes for two years [3][7]. Investors appear to be looking past potential fiscal strains, giving Takaichi the “benefit of the doubt” regarding her assurances that these stimulus measures will not compromise Japan’s public finances [3]. This optimism has triggered a distinct rotation within the equity market. On February 10, the Nikkei 225 Domestic Exposure 50 Index outperformed the Global Exposure 50 Index, pushing the ratio between the two to 0.76 [1]. This trend highlights a preference for companies reliant on local Japanese sales over export-heavy firms, despite the Yen strengthening to 155.24 per dollar [1][7]. Specific corporate performers underscored this bullish sentiment on Tuesday; SoftBank Group surged 10.7% amid AI optimism, while cable maker Furukawa Electric soared 22.9% on strong earnings results [3].

Technical Horizons and Market Resilience

From a technical perspective, the index’s climb to 57,651 points represents a 2.28% gain from the previous session and a staggering 47.96% increase compared to the same time last year [3]. Analysts note that the bullish acceleration remains intact as long as the index holds above the short-term pivotal support of 56,990 [1]. With the hourly RSI momentum indicator stabilizing around the 50 level after exiting overbought territory, the technical path appears clear for a test of higher resistance levels [1]. Market observers are now monitoring immediate upside targets at 58,932 and 59,884, with the psychological and technical objective sitting in the 60,833 to 61,215 range [1]. However, the volatility in the bond market remains a critical variable. While the 30-year JGB yield has recently attracted attention for crossing the 3.5% threshold, it retreated to 3.495% on Tuesday, while the 40-year yield dropped 8.5 basis points to 3.73% [5][7]. This stabilization in super-long bond yields suggests that while the market anticipates a shift in monetary dynamics, the immediate panic regarding borrowing costs may be subsiding [6].

Sources

Equities Asian Markets