Nikkei 225 touches 50,000, driven by Sanae Takaichi’s appointment as prime minister

22 Oct 2025

By Danish Lim, Senior Investment Analyst for Phillip Nova

The Nikkei 225 Futures (Dec 2025 contract) on the Osaka Exchange briefly touched the 50,000 mark at around 10:18 a.m. SGT on Tuesday, October 21, 2025, driven by optimism that Japan’s new coalition government will roll out policies to spur economic growth. However, profit-taking later in the session trimmed gains.

As of 21 October, the Nikkei 225 rose by 0.27% to close at 49,316.06; while the Topix index rose just 0.03% to 3,249.50. Both indices hit a new intraday record– with the Nikkei 225 hitting 49,945.95 while the TOPIX hit 3,274.06

In the currency market, the U.S. dollar strengthened past the ¥151 level as investors sold the yen, typically viewed as a safe haven, following the rally in Japanese equities. At midday, the dollar traded at ¥151.10–¥151.14, compared with ¥150.71–¥150.81 in New York overnight. The euro was quoted at $1.1633–$1.1635 and ¥175.79–¥175.86.

The continued rise in equities came ahead of Sanae Takaichi’s expected election as Japan’s new prime minister later in the day, following her coalition agreement with the Japan Innovation Party. Analysts noted that while markets had largely priced in the new government, expectations of political stability and expansionary fiscal policies spurred additional buying.

Investor sentiment was further lifted by easing concerns over U.S.-China trade tensions, after President Donald Trump expressed optimism about reaching a “fantastic deal” with Chinese President Xi Jinping in their upcoming meeting.

Apart from the index, these are some of the key stocks to watch:

Sumitomo Pharma (TSE: 4506 | 250.33% YTD)

Sumitomo Pharma gained on reports that the Japanese specialty and generic pharma company announced that it will co-promote diabetes drug Ozempic in a pact with Denmark’s Novo Nordisk.

Earlier in April, shares rose by the daily limit in Tokyo after results of a study showed the safety and potential benefits of stem cells used to treat Parkinson’s disease. The study used stem cells manufactured by Sumitomo Pharma.
The company is preparing to run clinical trials in the US to assess the safety of the treatment, bringing it one step closer to commercialization.

Mitsui Kinzoku Company, Limited (TSE: 5706 | 189.59% YTD)

The base metal company recently announced in late August that it will increase production capacity for its VSP electro-deposited copper foil for high-frequency circuit boards. Looking to boost output by 45% to 840tons per month from 580 tons announced in January
The VSP copper foil is used in servers and routers, with demand accelerating for the product due to its AI server-related applications

Fujikura Ltd. (TSE: 5803 | 155.19% YTD)

The optical fiber maker is seeing tailwinds from AI and data center-related demand, driven by data center scaling out, which requires more optical wiring.

Softbank Group Corp. (TSE: 9984 | 160.70% YTD)

Riding on gains from its stakes in Nvidia, TSMC, and tech startups.
The Vision Fund saw a profit of ¥451.39b, fueled by tech valuations and gains on holdings such as Coupang Inc, Auto1 Group SE, Symbotic Inc, and Swiggy Ltd.

IHI Corporation (TSE: 7013 | 126.22% YTD)

Defense equipment maker IHI produces aircraft jet engines, rocket propulsion systems, and ships for military and commercial use.
It also constructs nuclear power plants.
Japan has long limited defense spending to 1% of GDP. However, escalating geopolitical tensions and pressure from the US has prompted the government to target an increase in the defense budget to 2%.

Mitsubishi Heavy Industries (TSE: 7011 | 96.58% YTD)

The company manufactures gas turbines, nuclear/wind power generators, engines for aircrafts, as well as commercial and defense aircraft.
Company aims to double its gas turbine capacity in the next 2 years amid stronger demand for the equipment due to the proliferation of data centers.
Natural gas is seen as an alternative to wind and solar, is cleaner than burning coal, and is more readily available than nuclear energy.
Turbines installed decades ago are nearing the end of their useful life.
Australia also selected Mitsubishi Heavy to build a new class of naval frigates.

Ryohin Keikaku (aka MUJI, TSE: 7453 | 74.04%)

The company was seen as a tariff-resilient company, given its Americas exposure made up <5% of revnue.
MUJI has raised its FY25 guidance in all 3 quarters so far this year.

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