The Takaichi administration's “surprise dissolution” has both offensive and defensive aspects: Will the stock market rally continue? Key points to watch, according to Ikeda Yunosuke (池田雄之輔) of Nomura Securities

On 9 January 2026, reports said that Prime Minister Takaichi Sanae (高市早苗) was considering dissolving the House of Representatives. On 13 January, the first day after the long weekend, the market moved sharply, with the Nikkei Average reaching the ¥53,000 range for the first time in history. Ikeda Yunosuke (池田雄之輔), head of the Market Strategy Research Department at Nomura Securities, explains the potential impact.

The implications differ depending on whether the dissolution is viewed as offensive or defensive. Media reports indicated that the House could be dissolved at the opening of the ordinary Diet session on the 23rd, with voting likely to take place in February. An early dissolution could improve market sentiment, while it was also suggested that the government's decision would be influenced by the timing of budget enactment and the US-Japan and Japan-South Korea diplomatic schedules.

If the dissolution is judged to be offensive, rising approval ratings and an improved stock-market valuation could serve as positive catalysts. Conversely, if a delay is viewed as an avoidance strategy, risks to diplomatic schedules and economic trends have been highlighted. The US-Japan summit and China's export restrictions on rare earths were cited as particular background factors.

Regarding the market reaction, Nikkei futures topped ¥53,500 in the US market on the 9th, while dollar-yen moved into the ¥158 range as the yen weakened. On the 13th, the Nikkei Average rose sharply after the market opened, moving above ¥53,800. Points to watch include trends in approval ratings for the cabinet and the Liberal Democratic Party, the Prime Minister's comments on the foreign-exchange market, the Bank of Japan's stance on further easing, and the prospects for political cooperation after the election.