Tokyo closes at record high: Nikkei up 3.4% boosted by Takaichi premiership prospects and LDP–Nippon Ishin deal

Indices

The main Asian indices are exhibiting robust upward momentum, led by significant gains in Japan and notable advances in Hong Kong and mainland China. The Nikkei 225 (^N225) is currently trading at 49185.5, reflecting a notable daily increase of 3.36965. This surge, which places the index at a fresh year high, is driven by renewed investor optimism following the formation of a new ruling coalition and expectations of continued market-friendly policies. In Hong Kong, the Hang Seng Index (^HSI) has climbed to 25883, gaining 2.51866, supported by strong performances in technology and industrial sectors. In mainland China, the SSE Composite Index has seen an increase, currently at 3866.09, up 0.69, with positive momentum attributed to strong export data and easing U.S.-China trade tensions. The short-term micro-trend signals for the Nikkei 225 and Hang Seng Index remain flat, suggesting a pause after strong rallies as investors await further policy clarity.

Stocks

Stock activity across Asia is marked by sectoral leadership and sharp moves among key names. In Japan, standout performers include Resonac Holdings (4062.T) with a gain of 11 and Screen Holdings (7735.T) up 3, indicating strong investor appetite for technology and industrial names. In China, Brilliance Technology Co. (688093.SS) surged 12.59 and Tansun Technology Co. (688036.SS) advanced 4.75, reflecting robust sentiment in the technology sector. Conversely, Chinese electric vehicle manufacturers such as NIO Inc. (NIO/HK:9866), Geely Automobile (HK:0175), and BYD (HK:1211) have experienced declines between -5 and -9, as price wars and regulatory scrutiny weigh on the sector. In Hong Kong, Tencent Holdings (0700.HK) declined -3, and Midea Group (000333.SZ) fell -2.6, highlighting areas of weakness amid the otherwise positive backdrop.

Economic News

Recent economic data has been a key driver of the current rally. In China, GDP grew by 4.8 year-on-year in Q3, with industrial output up 6.5 and retail sales advancing 3.0, signaling ongoing recovery despite persistent property market challenges. In Japan, the Nikkei 225’s record high is underpinned by expectations of pro-stimulus policies and a stable political environment, with the Liberal Democratic Party’s coalition boosting market confidence. The Bank of Japan’s Tankan index for large manufacturers improved to 14, indicating resilience among major corporates, even as the manufacturing PMI fell to 48.5, pointing to some sectoral headwinds.

Economic Events

Important policy events are influencing the regional outlook. In Japan, the ruling coalition’s decision to hold a vote for a new prime minister on October 21, with Sanae Takaichi as a prominent candidate, is expected to reinforce a pro-growth policy stance. In China, the Communist Party’s leadership meeting in Beijing is shaping strategic direction for the next five years, with a focus on economic reform and financial market stability. These events are expected to maintain investor attention and could drive further market volatility as outcomes become clear.

Market Sentiment

Overall, market sentiment is bullish, supported by strong economic data, positive political developments, and policy reforms in both China and Japan. Investors are optimistic about the prospects for continued growth, particularly in technology and industrial sectors, while remaining cautious in areas such as real estate and select consumer names. The prevailing flat micro-trend signals in major indices suggest that, despite the optimism, there is an underlying wait-and-see approach as traders look for confirmation from upcoming policy announcements and economic releases.

Please note that the analysis is for informational purposes only and does not constitute financial advice. Users should conduct their own research.