Japanese stocks are expected to continue strengthening due to a combination of two factors favored by the market: a weakening yen and expectations of economic stimulus from Prime Minister Sanae Takaichi's government. Nikkei futures traded on the SGX were recorded as rising around 1.5%, while USD/JPY was trading around 153 per US dollar, weakening from its previous closing level. A weak yen is usually good news for Japanese exporters because their dollar sales appear larger when converted into yen.

On the political front, market participants are closely monitoring the economic measures being prepared by Takaichi. She has signaled that she will push for a support package for households and businesses to ease pressures on the cost of living and maintain purchasing power. Market expectations are that there will be a substantial fiscal stimulus—meaning the government is willing to spend to maintain growth. This sentiment has given investors the impression that Japan is ready to maintain economic momentum, not just about budget discipline.

This optimism is already evident in the stock market. The Nikkei index closed up around 1.4% to around 49,300 on Friday, indicating that investor risk appetite remains strong. Cyclical sectors such as manufacturing and industrial sectors have begun to rise, as they are believed to benefit from government aid, incentives, or energy subsidies. In other words, investors are not simply taking refuge in defensive stocks but are starting to boldly seek growth opportunities.

Another supporting factor is the exchange rate. With the yen weakening to nearly 153 per US dollar, major Japanese exporters such as automotive, electronics, and heavy machinery manufacturers are receiving an extra boost: their products become relatively cheaper on the global market, and overseas profits appear fatter when brought home. As long as this combination of "weak yen + government stimulus promises" persists, the Nikkei's bullish sentiment has the potential to persist. The market will now have to wait and see how aggressive Takaichi's economic package is—if it meets expectations, the rally could continue. If it's too modest, the euphoria could quickly subside. (asd)

Source: Newsmaker.id