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

TradingKey - February 26, 2026, The Nikkei 225 Index surpassed the 59,000-point mark for the first time, hitting a historic high and becoming a focal point of global capital markets. Under the dual catalysts of Nvidia (NVDA)'s better-than-expected earnings report and the nomination of new Bank of Japan officials, global capital is accelerating its inflow into Tokyo.

This rally is not driven by a single factor, but is the result of the synergy between Japan's domestic policy shifts, the global tech wave, and the influx of foreign capital. In addition, Sanae Takaichi's ascent has led the market to gradually lower its expectations for interest rate hikes by the Bank of Japan, providing further momentum for the sustained rise of the Japanese stock market.

The results of Japan's corporate governance reforms are showing, with improved profit margins, dividends, and share buybacks. Combined with the persistently weak yen, the earnings of export-oriented companies have been significantly unleashed, providing fundamental support for the bull market. The Takaichi cabinet's implementation of fiscal expansion, tax cuts, and industrial support has led to expectations for an economic recovery and a significant increase in risk appetite.

With U.S. stocks fluctuating at high levels and global funds rebalancing, the advantages of the Japanese stock market's low valuations and high dividend yields have become prominent. Foreign capital continues to increase its positions, pushing the benchmark past the 59,000-point psychological threshold.

Recently, the Japanese government officially nominated Professor Emeritus Toichiro Asada of Chuo University and law professor Ayano Sato of Aoyama Gakuin University as new members of the central bank's Policy Board, with the nominations expected to be submitted to the Diet for approval soon.

The nominations for the new Bank of Japan board members lean toward moderate easing, with an overall dovish stance. This suggests a slower pace of rate hikes, a lower terminal rate, and a favorable liquidity environment, which is a direct positive for the stock market.

Nvidia's latest earnings report once again exceeded market expectations. As Japan possesses world-leading semiconductor material and equipment suppliers, Nvidia's strong growth has directly propelled Tokyo Electron and Advantest and other tech stocks higher.

Sanae Takaichi has a clear stance on monetary policy, supporting easing and opposing rapid rate hikes to boost exports and the economy through a weak yen. Market participants have consequently lowered their expectations for the frequency and magnitude of BoJ rate hikes. With the yen remaining weak, the profitability of exporters is better secured.

The combination of fiscal expansion and loose monetary policy is likely to become the main theme driving the Japanese stock market upward, with the Nikkei Index potentially challenging the 60,000-point mark in the first quarter.