Summary:
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Nikkei and Topix surge to record highs
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Markets play catch-up with Wall Street rally
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Early election speculation boosts fiscal hopes
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Weak yen lifts exporters; Katayama comments fade
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Global risk appetite outweighs Fed concerns
Japanese equities surged to record highs on Tuesday as markets played catch-up with Wall Street’s recent rally and investors leaned into a familiar combination of yen weakness, global risk appetite and rising expectations of fiscal stimulus.
The Nikkei 225 jumped as much as 3.6% to a record 53,814, while the broader Topix climbed up to 2.4% to a fresh peak. The move followed a public holiday in Japan, with local investors reacting to new all-time highs in the S&P 500 and Dow Jones Industrial Average, where technology stocks led gains.
Sentiment was also buoyed by speculation that Prime Minister Sanae Takaichi may call an early election in the coming weeks to strengthen her coalition’s parliamentary position. Local media reported discussions within the ruling bloc, and coalition partner Ishin said Takaichi had met party leaders last week. Markets widely interpret the prospect of an early election as a signal for more proactive fiscal spending.
Currency dynamics reinforced the equity rally. The yen remained sharply weaker than at the previous Tokyo close, boosting the overseas earnings outlook for Japan’s export-heavy corporates
