Japan Stocks Rally on Snap-Election Bets; Yen Weakens to 158
Japanese equities surged as traders positioned for a potential snap election, reviving the 'Takaichi trade'—a market favorite tied to Sanae Takaichi's pro-stimulus policies. The Topix Index jumped 2.13%, with chip stocks like Advantest and Tokyo Electron leading gains. SoftBank ROSE nearly 5%.
Bond yields spiked amid concerns over Takaichi's $135 billion stimulus plan, which could flood markets with government debt. The 10-year yield climbed to 2.15%, while the yen tumbled to 158.25 per dollar—its weakest level in nearly a year. The currency's slide risks reigniting intervention fears, last seen at the ¥160 threshold in 2024.
Despite the Bank of Japan's December rate hike to 0.75%, traders remain skeptical about policymakers' ability to stem the yen's decline. Food and energy inflation continues to pressure households, fueling political tensions as Finance Minister Satsuki Katayama engages in Washington talks.
