Nikkei 225 Hits New Peak as Takaichi's Stimulus Hopes Boost Sentiment
The Nikkei 225 continues its upward trajectory, consolidating near its peak after months of steady gains. The index has been moving within a sharp ascending channel, with the 47,000-45,000 range acting as a crucial buffer zone for bulls. Meanwhile, Prime Minister Sanae Takaichi's leadership has sparked renewed expectations for fiscal expansion in Japan.
Short-term volatility is anticipated as traders reassess valuations, with the 50,000 threshold being the critical breakout point for confirming further upside. The expected stimulus package could exceed last year's ¥13.9 trillion program, prioritizing industrial revitalization and infrastructure spending. The Nikkei's long-term trend remains decisively bullish, supported by robust corporate earnings and an improving fiscal narrative.
Market sentiment will now hinge on the scale and timing of the Takaichi administration's fiscal measures and any shifts in the Bank of Japan's tone toward tighter policy. Mixed performances in the market underscore a transition from broad-based enthusiasm to more selective positioning as investors digest policy details and earnings outlooks. The Nikkei 225 (NKY:IND) closed nearly flat on Wednesday at 49,308, slipping just 0.02% after a volatile session. The index has held comfortably above key exponential moving averages, with the 20-day EMA near 47,234 and the 50-day EMA around 45,110 providing immediate support.
Under Prime Minister Takaichi, Japan expects growth particularly in digital infrastructure, defense industry, energy supply, AI, automation, and robotics sectors. The government plans tax incentives and subsidies to promote these sectors, with a special focus on technological innovation and overcoming labor shortages through automation. This is expected to impact stocks in these industries positively.
