Tokyo – In a landmark event, Japan's Nikkei 225 index has surged past the 50,000 mark for the first time ever, reaching a high of 50,342.25 points. This milestone reflects growing optimism in the Asian markets, spurred by a confluence of factors including expectations of economic stimulus from Japan's new Prime Minister, Sanae Takaichi, and anticipation of easing monetary policies by the U.S. Federal Reserve.
The Nikkei's surge is part of a broader rally across Asian stock markets. South Korea's Kospi index and Japan's TOPIX index also reached all-time highs, rising 1.7% to 3,326.37 points. Overall Asian stocks have risen by 0.8%. This widespread positive sentiment is partly attributed to emerging signs of progress in trade negotiations between the United States and China. Preliminary consensus has been reportedly reached on key issues such as export controls, fentanyl, and shipping levies, further boosting investor confidence.
Prime Minister Takaichi, who recently assumed office, is preparing a substantial fiscal package expected to surpass last year's allocation of 13.9 trillion yen (approximately US$92 billion). The stimulus is likely to prioritize inflation relief, investments in growth industries, and national security. Furthermore, Takaichi is scheduled to meet with U.S. President Donald Trump, with expectations that she will advocate for expanding domestic demand through a "high-pressure economy". This approach is viewed as potentially beneficial for both Japan and the U.S., by lifting Japan out of deflationary stagnation and reducing the U.S. trade deficit.
Adding to the positive momentum, recent U.S. economic data indicated that consumer prices rose below forecasts in September, strengthening market expectations that the Federal Reserve will cut interest rates at its October 28-29 meeting. The Bank of Japan is also scheduled to convene this week, with an interest rate decision due on Thursday. The central bank is expected to maintain rates steady at 0.5%, while monitoring the impact of U.S. tariffs.
The question remains whether the Indian stock market will mirror these gains. On Friday, October 26, 2025, both the Sensex and Nifty 50 ended lower amid broad-based selling pressure, with the Sensex declining 344.52 points (0.41%) to close at 84,211.88 and the Nifty 50 slipping 96.25 points (0.37%) to end at 25,795.15. However, trends on the Gift Nifty indicate a positive start for the Indian benchmark index on Monday, October 27, 2025.
Analysts suggest that the Nifty 50 has entered a phase of consolidation after a significant four-week rally. Sector-wise, Nifty Private Banks, PSU Banks, and Healthcare stocks experienced pressure, while Metal, Realty, and Oil & Gas sectors showed resilience.
Several factors could influence the Indian stock market's trajectory. Progress on a potential US-China trade deal, the US Federal Reserve meeting, and domestic profit-taking will likely play crucial roles. Investors will also be closely monitoring Q2 results, trends in FII flow, and key macroeconomic data. India's Ambassador to the United States, Vinay Mohan Kwatra, has discussed a mutually beneficial trade agreement with U.S. officials, which could further impact market sentiment.
While short-term uncertainties may persist, improving macroeconomic indicators and strong earnings could pave the way for a rally in the Indian stock market from the second half of 2026 onward. Consumption is expected to be a key driver for India's growth, with the contribution of consumption to India's GDP growth climbing to 4.4% by the end of 2026.
