REFILE-Japan's Nikkei touches 58,000 as yen, JGBs rally on election fallout

By Rocky Swift

TOKYO, Feb 12 (Reuters) - The Nikkei share average broke past 58,000 for the first time on Thursday, joined in a rare triple rally with government bonds (JGBs) and the yen as markets processed the fallout of Prime Minister Sanae Takaichi's historic election win.

Resuming trade after a holiday in Japan, the benchmark Nikkei 225 Index .N225 reached an intraday record of 58,015.08 before losing steam and closing slightly in the red at 57,639.84. So far in 2026, the Nikkei has surged nearly 15%. The broader Topix .TOPX climbed 0.7% to 3,882.16.

The earnings season is underway in the world's fourth-largest economy, and domestic share markets have been buoyed by bets that a decisive showing by Takaichi's Liberal Democratic Party in Sunday's national election will enable her to push through spending and tax-relief measures.

Since Takaichi began her ascent to become Japan's first female premier in October, the "Takaichi trade" has pushed domestic shares to successive record highs while spurring declines in JGBs and the yen. Takaichi reiterated on Monday that she was committed to "responsible, proactive fiscal policy."

"Following recent strong earnings results and the LDP's landslide victory under the Takaichi administration, the market has been on a significant upward trend," Wataru Akiyama, a strategist at Nomura Securities, said about domestic shares. "The sense of overheating seems to be intensifying, so profit-taking movements could emerge from here on."

The Nikkei's 14-day relative strength index (RSI) reached 72 on Thursday, above the 70-mark that indicates gains have stretched too far and are poised to reverse.

Prime Minister Takaichi is sensitive to how markets react to her decisions, particularly yen and JGB yield moves, two sources told Reuters. The yen rallied on Thursday after top currency diplomat Atsushi Mimura issued a fresh warning against currency volatility, and mentioned speculation about rate checks, a typical precursor to actual market intervention.

Long-dated securities led a rally in JGBs on the day, while the yen touched a two-week high of 152.28 per dollar.

The yen's surprising strength has sprung out of Takaichi's ability to secure a solid majority in the lower house and end concerns about political instability that had lingered since July last year, said Hirofumi Suzuki, chief foreign-exchange strategist at SMBC.

"This suggests that short positions in the yen have been unwound," Suzuki added.

There were 142 advancers on the Nikkei index against 82 decliners. Cosmetics maker Shiseido 4911.T surged 15.8%, the most since October 2008, after forecasting its first profit in three years. Honda Motor 7267.T was among the bigger losers, slumping 3.5% after the automaker posted disappointing results.

Results from SoftBank Group 9984.T after the bell on Thursday will be closely watched for details on how it will fund its massive investments in AI.