Japan's Market Euphoria Masks Deeper Questions About Takaichi's Mandate

57,000. That's the milestone Japan's Nikkei index crossed for the first time on Monday, riding the wave of Prime Minister Sanae Takaichi's crushing electoral victory.

The Numbers Behind the Surge

Takaichi's Liberal Democratic Party didn't just win—they obliterated the opposition, securing a two-thirds supermajority in the Lower House. This gives her virtually unchecked power to push through her agenda: increased spending and suspended food taxes.

The yen strengthened to 156.88 per dollar, reflecting renewed investor confidence. Japanese stocks hit record highs as markets bet on Takaichi's stimulus promises. But here's what makes this particularly striking: while Japan celebrated, U.S. Big Tech was hemorrhaging value.

Amazon alone lost over $300 billion in market cap last week. Nvidia, Meta, Google, and Oracle all joined the carnage as Big Tech collectively shed more than $1 trillion in valuation.

Tale of Two Markets

The divergence is remarkable. While Silicon Valley grappled with Jeffrey Epstein document revelations naming tech luminaries like Sergey Brin, Peter Thiel, and Reid Hoffman, Asian markets marched to a different beat.

Chinese chip designer Montage Technology surged 60% on its Hong Kong debut. Italy's UniCredit posted record annual profits of €10.6 billion. The contrast couldn't be starker.

"We're in a gold rush right now with AI," said Gabriel Shahin from Falcon Wealth Planning. "There is money that will be deployed... It's just the carousel sometimes scares people."

That carousel helped push the Dow above 50,000 for the first time on Friday, with a 2.47% jump. The S&P 500 rallied 1.97%, clawing back into positive territory for 2026.

The Private Credit Wild Card

But beneath the surface optimism lurks a $3 trillion question mark: private credit markets. AI disruption is pressuring software companies—a major borrower group for private lenders. Asset managers with large private credit franchises tumbled last week as investors worried about how AI could upend business models and lift default risks.

This adds another layer of complexity to the current market dynamics. While public markets celebrate AI's potential, private markets are grappling with its disruptive reality.

Political Contrasts

The political backdrop makes Japan's triumph even more pronounced. While Takaichi consolidated power, U.K. Prime Minister Keir Starmer faced mounting pressure after his chief of staff quit over the Peter Mandelson appointment controversy—another Epstein connection haunting Western politics.

Meanwhile, Hong Kong media tycoon Jimmy Lai received a 20-year prison sentence under China's national security law, a stark reminder of the region's political tensions.