Asian markets today: Japan's Nikkei 225 surpasses 54,000 mark on expectations of snap election

Japanese equity benchmarks scaled to new record levels on Wednesday amid expectations that Prime Minister Sanae Takaichi may call a snap election, potentially as early as February.

If announced, it would mark Takaichi’s first electoral test before Japanese voters.

The Nikkei 225 surged 1.51%, breaching the 54,000 milestone for the first time, after jumping more than 3% to a record close on Tuesday. The broader Topix index also extended its rally, advancing 0.86% to fresh highs.

Meanwhile, the Japanese yen weakened beyond the 159 level against the US dollar, sliding to its lowest point since July 2024, when authorities last stepped in to curb the currency’s decline.

What's driving the rally?

Nikkei 225 futures jumped after the Yomiuri Shimbun reported late Friday that Prime Minister Sanae Takaichi may dissolve the Lower House as early as this month, fueling speculation of a snap election in early February.

Takaichi, Japan’s first woman prime minister and an advocate of expansionary fiscal measures, is currently backed by strong approval ratings. Holding an early election could strengthen her political mandate and provide greater flexibility in governance.

"It's widely believed in markets that if Takaichi dissolves parliament, the result will be a weaker yen, higher equities and lower bond prices," based on the idea that “early elections mean proactive fiscal spending,” Maki Sawada, an equities strategist at Nomura Securities, was quoted as saying by Reuters.

Asian markets today

Meanwhile, other Asian markets showed a mixed trend, with South Korea’s Kospi hovering just above the flatline, while the small-cap Kosdaq slipped 0.14%.

Australia’s S&P/ASX 200 edged lower. On the other hand, Hong Kong’s Hang Seng index gained 0.35%, and China’s mainland CSI 300 rose 0.14%.

Wall Street today

Overnight in the U.S., all three key equity benchmarks closed lower as markets remained volatile amid a spate of proposals put forward by U.S. President Donald Trump in recent days.

The S&P 500 slipped 0.19%, weighed down by selling in JPMorgan shares despite stronger-than-expected results, while the Dow Jones Industrial Average declined 0.8%. The Nasdaq Composite also edged down 0.1%.

(With inputs from agencies)

Disclaimer: This story is for educational purposes only. Please consult with an investment advisor before making any investment decisions.