Tokyo stocks jumped sharply on Tuesday morning, with the Nikkei 225 climbing more than 3 per cent, amid speculation that Prime Minister Sanae Takaichi may call a snap election to leverage her government’s strong poll ratings.
In early trading, the Nikkei rose 3.37 per cent, or 1,751.20 points, reaching 53,691.09. The surge was fueled not only by election optimism but also by a catch-up effect after Monday’s Japanese national holiday and gains on Wall Street overnight.
Takaichi, appointed Japan’s first female prime minister in October, currently enjoys an approval rating around 70 per cent, buoying investor confidence in her leadership. However, her ruling coalition holds only a slim majority in the powerful lower house of parliament, limiting its ability to advance her ambitious domestic and economic policy agenda.
Analysts say a snap election could strengthen her mandate and stabilize policymaking. “If a lower house election is confirmed, we can anticipate a renewed buying trend,” said Monex brokerage. “This is because it is significant to have the foundation of the Takaichi administration solidified.”
According to reports in the Yomiuri and Mainichi newspapers last week, citing unnamed government sources, Takaichi is considering dissolving the lower house at the start of the parliamentary session on January 23. Should she proceed, the Yomiuri indicated that a general election could be “highly likely to be held in early to mid-February.”
Investors are closely watching the potential timeline, as a quick election could reshape Japan’s political and economic outlook. A stronger parliamentary majority would give Takaichi more leeway to pursue reforms, including structural economic measures and security policy initiatives, which have been central to her campaign promises.
Market reaction to the snap election speculation highlights the strong link between politics and investor sentiment in Japan, where government stability often drives short-term gains in equities. Analysts caution, however, that any delays or political setbacks could temper market enthusiasm.
With both domestic support and global market conditions currently favorable, Prime Minister Takaichi appears well-positioned to consolidate her position—an outcome that Tokyo traders clearly welcomed on Tuesday.
