Nikkei Average Surpasses 54,000 for the First Time During Trading Hours Amid Market Rally Driven by Prime Minister Takashi’s Dissolution Speculation

Nikkei Average Hits Record High During Trading Hours

On January 14th, Japan’s Nikkei 225 index broke through the 54,000 mark during trading hours for the first time ever, climbing over 400 points at one point to set a new record high [1][4].

The market was boosted by speculation that Prime Minister Sanae Takashi might dissolve the lower house of Parliament, fueling investor optimism about political stability and future growth prospects [1][2][4].

Prime Minister Takashi’s Decision to Dissolve Parliament

Reports indicate that Prime Minister Takashi informed senior members of the ruling party of her intention to dissolve the House of Representatives at the start of the upcoming regular session scheduled for January 23rd. This move effectively sets the stage for an early general election in early February, which is quite unusual and has caught the market’s attention [2].

On January 13th, market activity surged with rising stock prices, higher bond yields, and a weakening yen, as news of the dissolution spread across Japan. The opposition’s stagnant support also played a role in the decision to dissolve the parliament [2].

Long-Term Interest Rates Reach 27-Year High

In the bond market on the same day, the yield on 10-year government bonds rose to 2.185%, marking the highest level since February 1999—about 27 years ago [5].

The rise in long-term interest rates, in tandem with stock gains, indicates continued market enthusiasm. However, some analysts warn that declines in U.S. financial stocks could impact Japan’s banking sector and bond markets [1].

Key Market Movements

• Nikkei 225: Surpassed 54,000 during trading hours, hitting a record high [1][4]
• Long-term interest rates: Reached 2.185%, the highest in 27 years [5]
• Yen depreciation: Accelerated on dissolution speculation [2]

UN Economic Outlook and Japan

The United Nations projects global economic growth at 2.7% in 2026, with Japan’s growth slowing to around 0.9%, down from 1.2% in 2025 [3].

While concerns about AI investment risks and potential financial bubbles are raised, recent market trends driven by political uncertainty remain bullish for Japan’s economy. Investors are closely watching the upcoming election and its impact on market stability [3].

Regional Growth Rate Forecasts for 2026

• United States: 2.0% (modest growth)
• Japan: 0.9% (slowing from 1.2% in 2025)
• European Union: 1.3% (decelerating)
• China: Maintaining high levels but showing signs of slowdown

These developments are key points to watch as Japan approaches its dissolution and general election. Market experts advise caution over potential upward limits and volatility ahead [1].