Japan's stock market powers to a fresh record on a new leader, but the hype could fizzle fast, analysts warn

Group 1 - Japan's stock markets, particularly the Nikkei 225, have reached record highs following Sanae Takaichi's leadership victory in the ruling Liberal Democratic Party, with the index gaining 1.2% to over 48,500 [1][6] - Traders are optimistic about Takaichi's pro-growth and pro-fiscal policies potentially reviving Abenomics and stimulating the economy, although analysts express caution regarding the sustainability of this optimism due to structural and political constraints [2][4] - The current economic environment differs significantly from the early Abenomics era, with consumer inflation around 3% and the dollar trading at approximately 150 yen, limiting fiscal and monetary expansion options [3] Group 2 - Analysts from Goldman Sachs note Takaichi's support for proactive fiscal policy but suggest she will likely adhere to the coalition government's existing policy stance, which may prevent immediate large-scale fiscal expansion [4] - The expectation is that Takaichi's victory will not alter the Bank of Japan's monetary policy, with a rate hike anticipated in January [5]