The Japanese stock market had a visible recovery after the Liberal Democratic Party, led by Sanae Takaichi, secured a landslide victory in the early parliamentary elections.

Japan’s main stock index, the Nikkei 225, increased by 4.5%, recording a historic high above the 57,000 level. 

Japan’s Election Outcome Strengthens Sanae Takaichi’s Mandate and Economic Agenda

The Liberal Democratic Party scored their highest votes in their history, securing 316 seats out of 465 in the House of Representatives. With its coalition partner, the Japan Innovation Party, their combined control rose to 352 seats.

With that, Sanae Takaichi succeeded in securing two-thirds of parliament seats, giving her a bigger opportunity to deliver on her economic agenda.

Takaichi’s economic agenda is characterized by dovish monetary policy through increasing the country’s defense spending, tax cuts, and regulatory reforms in the corporate sector. These all were visible in her monetary easing package exceeding $135 billion, which was in favor of corporations and the investing environment.

Impact of Sanae Takaichi’s New Government on Japanese Stocks & Yen

The news of the package gave much optimism to Japanese stock investors, incentivizing them to spend more. This also led to an increase in bond yields for two years to their highest levels since 1996, up 1.3%.

Similarly, the Japanese yen saw a small uptick after news of the government keeping an eye on the foreign exchange market and considering all options, including using the country’s foreign currency reserve totaling $1.4 trillion.

Takaichi is still to face yet another test, most noticeable in combating high inflation, as well as improving living conditions and lowering geopolitical tensions with China, along with strengthening trade relations with the United States, especially as MP Takaichi plans on visiting Washington in March to meet with Trump.

Technical analysis of Japanese Stock for February 2026

The Nikkei 225 continues in its uptrend trajectory to reach new highs, currently nearing $56,363. Looking at the below chart, the index was successful in going above earlier tops with a positive momentum. As for the levels near $52,000, they are close support levels, pushing the current uptrend if prices keep on going higher.