'Takaichi Trade' Propels Nikkei to 57,000; Yuan Surges to Multi-Year High

Asian equity markets posted historic gains on Tuesday, led by a relentless rally in Japanese stocks, while foreign exchange markets saw a significant strengthening of the Chinese Yuan against the Dollar.

Nikkei Smashes Records on Political Mandate

The Nikkei 225 breached the psychological 57,000 level, rising over 2% to refresh historical highs. The surge is being driven by the so-called “Takaichi Trade,” following Prime Minister Sanae Takaichis decisive election victory. Investors are aggressively pricing in policy continuity and aggressive fiscal support.

In parallel, broader Asian markets mirrored this optimism. Hong Kong's Hang Seng Tech Index rose over 1.5%, bolstered by renewed interest in AI applications, specifically ByteDance's internal testing of its “Seedance 2.0” video model.

RMB Strength and Dollar Stability

In the FX space, the Offshore Yuan (CNH) demonstrated significant strength, breaking the 6.91 barrier to trade at 6.9094, its strongest level since May 2023.

Meanwhile, the US Dollar Index (DXY) found footing near 96.97 after Monday's sell-off. Despite the Yuan's surge, the greenback remains supported as markets await crucial data regarding the Federal Reserve's rate path.

Market Data Snapshot

• Nikkei 225: Breached 57,000, up over 2%
• Hang Seng Tech Index: Rose over 1.5%
• Offshore Yuan (CNH): Trading at 6.9094, strongest since May 2023
• US Dollar Index (DXY): Holding near 96.97