TOKYO: Japanese stocks posted a record-high close on Wednesday, while the yen and bonds extended their declines as markets priced in the possibility of a snap election that could pave the way for expanded fiscal stimulus.
A sharp fall in the yen since last week provided a tailwind for equities, while also fuelling bets that the Bank of Japan may have to speed up raising rates to stem further declines in the currency.
The Nikkei rose 1.48 percent to 54,341.23, while the broader Topix climbed 1.26 percent to 3,644.16, both notching record closing highs.
The yen fell to its weakest point in 18 months against the dollar, hovering near a level where the market expects a government intervention.
“A weaker yen has raised speculation that the BOJ will have to raise rates at a faster pace,” said Takashi Fujiwara, chief fund manager at Resona Asset Management’s fixed income investment division.
The so-called Takaichi rally revived on Tuesday following a media report that Prime Minister Sanae Takaichi might dissolve parliament this month and call for a general election in February.