The so-called “Takaichi trade” has returned to the spotlight following the decisive victory of Prime Minister Sanae Takaichi’s coalition in the lower-house election. The LDP secured 316 of 465 seats, and together with 36 seats won by coalition partner Ishin, the bloc achieved a two-thirds supermajority (over 310 seats). The result removes key legislative hurdles and strengthens expectations for fiscal expansion, including the proposed two-year suspension of the 8% sales tax on food, which markets view as supportive for economic growth but also as a challenge for Japan’s fiscal sustainability.
The Japanese yen is one of the stronger G10 currencies today. Source: xStation 5
For equities, political clarity provides a short-term positive catalyst. Investors are increasingly positioning into Japanese stocks in anticipation of higher public spending, increased defence outlays, and strategic investments (AI, digitalisation), even as the bond market remains sensitive to the risk of increased debt issuance. The main flashpoint remains the tax plan: estimates point to an annual fiscal gap of around ¥5 trillion, prompting markets to closely watch how the government plans to fund it without undermining confidence in Japan’s already very high public debt.
The main Japanese equity index, JP225 (Nikkei 225), is up just 0.25% today. However, that was enough to push the index to record highs. Source: xStation 5
The yen, meanwhile, remains the key “shock absorber”—and authorities are clearly drawing a line against disorderly currency weakness. In thin and volatile Monday trading, USDJPY briefly rose to 157.729 before quickly retreating; following a series of intensified warnings, the pair fell by around 0.4% to 156.620, stabilising near the 5-day moving average (~156.600). With a coordinated message from the Prime Minister’s Office, the Ministry of Finance, and senior FX officials stressing “urgency” and opposing one-sided moves, intervention risk has clearly increased, which should cap near-term upside in USDJPY despite the expansionary policy outlook expected after Takaichi’s victory.
Source: xStation 5
Daily Summary – Indices rebound as oil markets await further developments
📀Coinbase and MicroStrategy surge as Trump challenges Wall Street banks
Iran: Situation overview and outlook
US OPEN: Wall Street buoyed by robust data and shifting sentiment
The content of this report has been created by XTB S.A., with its registered office in Warsaw, at Prosta 67, 00-838 Warsaw, Poland, (KRS number 0000217580) and supervised by Polish Supervision Authority ( No. DDM-M-4021-57-1/2005). This material is a marketing communication within the meaning of Art. 24 (3) of Directive 2014/65/EU of the European Parliament and of the Council of 15 May 2014 on markets in financial instruments and amending Directive 2002/92/EC and Directive 2011/61/EU (MiFID II). Marketing communication is not an investment recommendation or information recommending or suggesting an investment strategy within the meaning of Regulation (EU) No 596/2014 of the European Parliament and of the Council of 16 April 2014 on market abuse (market abuse regulation) and repealing Directive 2003/6/EC of the European Parliament and of the Council and Commission Directives 2003/124/EC, 2003/125/EC and 2004/72/EC and Commission Delegated Regulation (EU) 2016/958 of 9 March 2016 supplementing Regulation (EU) No 596/2014 of the European Parliament and of the Council with regard to regulatory technical standards for the technical arrangements for objective presentation of investment recommendations or other information recommending or suggesting an investment strategy and for disclosure of particular interests or indications of conflicts of interest or any other advice, including in the area of investment advisory, within the meaning of the Trading in Financial Instruments Act of 29 July 2005 (i.e. Journal of Laws 2019, item 875, as amended). The marketing communication is prepared with the highest diligence, objectivity, presents the facts known to the author on the date of preparation and is devoid of any evaluation elements. The marketing communication is prepared without considering the client’s needs, his individual financial situation and does not present any investment strategy in any way. The marketing communication does not constitute an offer of sale, offering, subscription, invitation to purchase, advertisement or promotion of any financial instruments. XTB S.A. is not liable for any client’s actions or omissions, in particular for the acquisition or disposal of financial instruments, undertaken on the basis of the information contained in this marketing communication. In the event that the marketing communication contains any information about any results regarding the financial instruments indicated therein, these do not constitute any guarantee or forecast regarding the future results.
