The Topix index hits a 31-year high
The surge higher in Japanese stocks owes much to do with a technical breakout stemming from news at the end of last week that prime minister Suga is stepping down.
The run of gains is continuing to today with the Topix breaking to its highest level in 31 years, breaking away from the consolidation range since March - which was when the BOJ pulled support (even if they say they didn't) on ETF purchases.
The Nikkei is also seeing a strong breakout to its highest since April:
In terms of the big picture, fundamentally a change in premiership should not bring about material change to the Japanese political landscape but Suga's short tenure does bring back some volatility to the supposed status quo.
Looking at Japanese stocks, I'd argue the latest upside break here owes much to a technical run after months of consolidation and while there may be scope for further gains this week, I fear that a sharp retracement beckons once the euphoria ends.
