Sanae Takaichi’s meteoric rise to Japan’s premiership has sent markets into a frenzy, with investors betting on a revival of "Abenomics" policies since Shinzo Abe is considered a mentor to her. Japanese stocks shot up to record highs, while the yen fell below the 150-per-dollar threshold, showing growing optimism over fiscal stimulus and tax cuts, though analysts warn the currency remains vulnerable given the tightening circumstances of Bank of Japan. Unlike Abe’s deflationary era, Takaichi faces today’s inflationary pressures, a staggering 216% debt-to-GDP ratio, and a central bank shifting from easing to rate hikes, narrowing room for bold moves. The Nikkei’s recent 5% surge hints at market enthusiasm, but bond yields hit 17-year highs as investors fret over Japan’s fiscal health and the BOJ’s decision. While some see Takaichi as a fresh departure from recent "business-as-usual" leadership, others fear that her dovish stance clashes with inflationary realities, risking a repeat of past monetary policy missteps.
EQUITY
The main market index opened the week with another record high through Advanced Micro Devices’ 29% gain after securing a multi-year AI chip deal with OpenAI. Asian markets followed suit, with Japan’s Nikkei hitting a record high on fiscal optimism from Sanae Takaichi’s leadership and tech giants like TSMC and Renesas climbing. Elsewhere, Comerica notched a 14% gain on a takeover bid, Critical Metals jumped 40% on rare earth speculation, and Tesla plans for a lower-priced Model Y.
GOLD
As gold prices are an inch away from the $4,000 milestone, U.S. government shutdown, French political turmoil, and Japanese leadership change serve as reminders as to why sellers are almost non-existent. Analysts cite a "collective verdict" on monetary distrust, with Fed rate-cut expectations and institutional inflows driving price higher, while technical charts signal $4,000 as both a psychological and strategic target and a subsequent 5-7% pullback.
OIL
Crude oil opened the week higher after OPEC+ delivered a lower-than-expected November production hike of 137,000 bpd, citing fears of a global supply surplus, though geopolitical tensions and China’s aggressive strategic reserve expansion provided a buffer against downside pressure. China’s move to secure energy security with regard to Ukraine-related disruptions and declining oil demand has become a critical counterweight to oversupply concerns, supporting short-term pricing.
CURRENCY
The dollar surged to 98.2 as U.S. government shutdown reached a stalemate, while France’s political chaos following Prime Minister Sebastien Lecornu’s resignation and Japan’s dovish leadership shift under Sanae Takaichi fuelled demand for safe-haven assets, pushing the yen to a 2-month low and the euro lower, though not much volatility. Analysts warn of heightened intervention risks as Japanese officials caution against "excessive" currency moves.
