Nikkei Soars as Ishiba Resignation Sparks Fiscal Policy Bets

2025-09-08 general

tokyo, Monday, 8 September 2025.
Tokyo’s Nikkei average jumped 1.45% to 43,643.81 yen following Prime Minister Ishiba’s resignation announcement. The market anticipates expansionary fiscal policies from the incoming administration. The jpx nikkei index 400 also reached a record high. This surge occurred despite ongoing concerns about the us economy. Political shifts are now a key driver for Japanese stocks. The resignation has fueled speculation about who will be the next prime minister. Potential candidates include Taro Kono, Shinzo Abe’s brother Nobuo Kishi, and Shinzaburo Koizumi. The market is reacting to the potential implications of a new leader.

Market reaction

The tokyo stock exchange saw the nikkei average rise for the third consecutive day [1]. The index closed at 43,643.81 yen, a gain of 625.06 yen, which translates to a 1.45% increase [1]. This surge was primarily driven by speculation that the next administration would implement expansionary fiscal policies [1][3]. The jpx nikkei index 400 also experienced gains, hitting a new high of 28,190.75, up 297.92 points or 1.07% [1][4]. Trading volume on the tokyo stock exchange prime market reached 4.4989 trillion yen with 1.94793 billion shares traded [1].

Currency and sector impacts

Ishiba’s resignation announcement on september 7 led to a weaker yen, trading at 148 yen against the dollar [1][2]. This represents a decline from the 147.35-147.45 yen range seen in new york trading on september 5 [2]. Expectations of increased defense spending have boosted defense-related stocks like mitsubishi heavy industries [1][2]. Conversely, real estate stocks such as mitsui fudosan have risen, while banking stocks, including mitsui sumitomo financial group, have faced downward pressure amid speculation that the bank of japan will delay additional interest rate hikes [1][2].

Expert analysis and future outlook

Market analysts suggest that the nikkei’s upward movement is largely influenced by expectations surrounding the ‘post-ishiba’ era and potential fiscal stimulus [3]. A key focus is the upcoming election for the leader of the liberal democratic party, with attention on the economic policies advocated by each candidate [5]. Despite domestic optimism, concerns persist regarding the us economy, particularly following the release of the august u.s. employment statistics [1][3]. Itoh Tomoyo, a technical analyst, suggests that if the nikkei average surpasses its august 19 high of 43,876 yen, it is likely to close significantly higher than its september 5 high of 43,220 yen [7].

Upcoming economic data and potential risks

Investors are closely monitoring upcoming economic data, including the u.s. consumer price index (cpi) release on september 11 [6]. The market has largely priced in interest rate cuts by the federal reserve at the september 16-17 federal open market committee (fomc) meeting [6]. Ig securities analysts anticipate a potential nikkei average range of 41,800 to 43,500 yen for the coming week, highlighting the u.s. cpi, political uncertainties, and yen appreciation as key factors [8]. Overseas investors increased their selling of japanese stocks to ¥303.1 billion in the week of august 25-29, up from ¥198.8 billion the previous week [8].

Bronnen

stock market political speculation