The Japanese Nikkei 225 index has surged beyond 50,000 points for the first time in history, fueled by a wave of optimism. Although the newly appointed Prime Minister Sanae Takaichi is still settling into her office, the market has already determined that it is time for a bullish outlook, especially amid expectations of a dovish shift from the Federal Reserve.
On Monday, the Nikkei rose by 2.1% to reach 50,342 points, while the broader TOPIX index gained 1.7%, hitting a new high. The Nikkei climbed by nearly 12% in October alone, suggesting that the Japanese market is poised to end the year on a strong note.
Takaichi, who took office just a week ago, is preparing a fiscal stimulus package that could surpass last year’s 13.9 trillion yen (approximately $92 billion). The funding is intended to combat inflation, support technological sectors, and bolster national security. In Tokyo, these measures are dubbed “support initiatives,” while on Wall Street, they are simply seen as stimulative actions showing positive traction.
Meanwhile, data from the US showed a slowdown in inflation, with consumer prices rising less than expected in September. The market interpreted this as a sign that the Federal Reserve might lower interest rates at its meeting on October 28–29.
When the world’s two largest economies signal easing policies simultaneously, investors tend to put their differences aside and start buying.
The Bank of Japan is scheduled to meet on Thursday and is widely expected to keep its policy rate at 0.5%. The official line cites a desire for “greater clarity” regarding US tariffs, while the unwritten sentiment appears to be a wait-and-see approach until trends stabilize across the Pacific.
The Nikkei's record high seems justified, as it reflects a market that aligns with the expectations of its authorities. If Takaichi can indeed display the political vigor that Tokyo anticipates, the 50,000 mark could become a new starting point rather than a ceiling.
