Japan's Indexes Dropped 2% as Traders Unwound Takaichi Trade

Akira Ito
14 Oct, 2025
Tokyo

Japan's market indexes fell sharply on Tuesday as traders unwound the so-called "Takaichi trade."

The Nikkei 225 Stock Average dropped 2.3%, and the broader Topix fell 2.2% amid rising political uncertainty and growing skepticism about LDP leader Sanae Takaichi's bid for the premiership.

Benchmark indexes in Tokyo soared more than 5% after the LDP elected Sanae Takaichi, and investors hoped that the newly elected leader's support for ultra-loose monetary policy and a fiscally expansionary stance would support higher highs in stocks. 

However, those expectations faced a wall of reality after the Komeito Party announced its plans to leave the ruling coalition after 26 years, voicing its deep skepticism about Takaichi's policies. 

Market sentiment was further dented after the U.S. president threatened additional steep tariffs on China, as both sides remained far apart in resolving differences. 

The Japanese yen strengthened to 151.83 against the U.S. dollar amid rising hurdles to Takaichi's bid to become Japan's next prime minister. 

 

Japan Indexes and Stocks 

The Nikkei 225 Stock Average dropped 2.3% to 46,971.84, and the broader Topix fell 2.2% to 3,128.01. 

Tech stocks extended losses amid worries about the U.S. trade policy. 

Tokyo Electron Ltd. dropped 2.4% to ¥28,575.0, Advantest Corp. fell 3.3% to ¥17,235.0, and Lasertec Corp. declined 1.9% to ¥19,840.0. 

Ocean freight shipping companies advanced after tensions in the Middle East eased following a ceasefire agreement between Hamas and Israel. 

Kawasaki Kisen Kaisha Ltd. added 2.2% to ¥2,063.50, Mitsui O.S.K. Lines Ltd. added 0.6% to 4,373.0, and Nippon Yusen KK advanced 0.7% to ¥5,010.0.