Nikkei Breaks 59,000 to Hit New Record High, How Far Is Japan Bull Market From 60,000 Under Takaichi ‘Reflation’ Whirlwind?

TradingKey - On February 26, 2026, the Nikkei 225 Index hit the 59,000 level for the first time, setting a new all-time high and becoming the focal point of global capital markets. Fueled by the dual catalysts of Nvidia’s better-than-expected earnings and the nomination of new Bank of Japan officials, global capital is accelerating its inflow into Tokyo.

This surge is not driven by a single factor but is the result of a synergy between Japan's domestic policy shifts, the global tech wave, and an influx of overseas capital. Furthermore, since Sanae Takaichi took office, the market has gradually lowered expectations for Bank of Japan interest rate hikes, providing further momentum for the sustained rally in Japanese equities.

Japanese corporate governance reforms have borne fruit, with improved profit margins and increased dividends and share buybacks. Combined with the persistently weak yen, the earnings of export-oriented enterprises have been significantly unleashed, providing fundamental support for the index's bull run. The Takaichi cabinet’s push for fiscal expansion, tax cuts, and industrial support has fueled expectations for economic recovery, significantly lifting risk appetite.

As US stocks fluctuate at record highs and global funds rebalance, the advantages of Japan’s low valuations and high dividend yields have become prominent. Overseas investors continue to increase their holdings, pushing the benchmark index past the 59,000 psychological milestone.

Recently, the Japanese government officially nominated Toichiro Asada, professor emeritus at Chuo University, and Ayano Sato, a law professor at Aoyama Gakuin University, to serve as new members of the Bank of Japan’s Policy Board. The nominations are expected to be submitted to the Diet for approval shortly.

The nominations for the new Bank of Japan board members lean toward moderate easing, reflecting an overall dovish stance. With the pace of rate hikes slowing and terminal rate expectations moving lower, the friendly liquidity environment serves as a direct catalyst for the stock market.

Nvidia’s latest earnings results once again exceeded market expectations. Japan is home to world-leading semiconductor material and equipment suppliers; thus, Nvidia’s robust growth has directly propelled technology stocks such as Tokyo Electron and Advantest higher.

Sanae Takaichi has maintained a clear stance on monetary policy, supporting easing and opposing rapid rate hikes to bolster exports and the economy through a weak yen. Consequently, the market has scaled back expectations for the frequency and magnitude of BoJ rate hikes, ensuring a weak yen and more secure earnings for exporters.

The combination of fiscal expansion and loose monetary policy is likely to become the primary narrative driving the Japanese stock market higher, with the Nikkei Index potentially challenging the 60,000 mark within the first quarter.