The Japanese yen fell sharply after pro-stimulus lawmaker Sanae Takaichi won the ruling Liberal Democratic Party leadership contest, positioning her to become Japan’s first female prime minister. Investors welcomed her victory as a boost for growth expectations, sending Nikkei stock futures on the Chicago Mercantile Exchange soaring more than 4% ahead of Tokyo trading. The yen weakened as much as 1.4% toward the psychologically significant 150 level against the dollar and approached record lows versus the euro.
Takaichi’s rise was unexpected by many market participants, who had anticipated that political scion Shinjiro Koizumi, viewed as more fiscally cautious, would win. Unlike Koizumi, Takaichi has advocated for expansionary fiscal policy and, in a recent Kyodo survey, suggested the Bank of Japan should maintain current interest rates. Analysts noted that while her policies could stimulate equities, they may also raise concerns about increasing bond supply and reduce the likelihood of a BOJ rate hike in the near term.
“It might be more of a positive surprise for equities,” said Anna Wu, cross-asset investment strategist at VanEck Australia. “I won’t be too surprised if long-end yields rise a bit on Monday, given her overarching fiscal policy,” she added, while emphasizing that Takaichi is unlikely to overstimulate the economy, limiting potential volatility.
Elsewhere in financial markets, oil prices climbed after OPEC+ agreed to revive only 137,000 barrels a day of previously halted supply, a slower pace than earlier this year. US equity futures edged higher after the S&P 500 closed largely unchanged on Friday, while Bitcoin reached a fresh record over the weekend amid broader optimism around the US government shutdown and historical cryptocurrency performance in October, often dubbed “Uptober.”
In Asia, futures suggest that Australian stocks may rise while Hong Kong markets could dip. Mainland Chinese markets remained closed for a holiday. European traders are watching French bond futures closely after President Emmanuel Macron’s largely unchanged cabinet provoked opposition backlash, including the appointment of Roland Lescure as finance minister to navigate a fractured parliament. The euro edged lower early Monday, reflecting broader greenback strength.
