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    Japanese stocks surged as the Nikkei reached 44,000 following PM Ishiba’s resignation.

    by VT Markets
    /
    Sep 9, 2025
    Japan’s Nikkei share index has reached a new high of 44,000, while the Topix index has also hit its highest level ever. Prime Minister Ishiba resigned over the weekend, which may lead to changes in Japan’s leadership. This shift could impact the Bank of Japan’s policies and might weaken the yen.

    Falling Government Bond Yields

    Japanese government bond yields are decreasing as stock prices rise. The current economic situation indicates growth and possible changes in monetary policy. With the Nikkei exceeding 44,000, there is strong upward momentum. This trend suggests considering long positions, like buying call options on the index, to take advantage of further gains. The index has gained over 20% this year, demonstrating the strength of this rally. A weaker yen is a key factor for Japanese stocks as it increases the value of overseas profits for exporters. The yen has fallen past 155 against the dollar, prompting us to look into currency derivatives that benefit from this decline, such as buying call options on the USD/JPY pair.

    Political Uncertainty and Market Nervousness

    However, the resignation of the Prime Minister brings significant political uncertainty, which could create turbulence in the market. The Nikkei Volatility Index has risen by 15% since the announcement, indicating market anxiety. This suggests that strategies like buying straddles or strangles could be wise, as we may see larger price swings in either direction. All of this hinges on what the Bank of Japan decides next, which is now uncertain due to the change in leadership. We’ve seen expectations for policy shifts in the past, only for the BOJ to maintain its easy-money approach. Any indication of a change, especially with falling government bond yields, will be crucial for our positions. Create your live VT Markets account and start trading now.

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