FX168 Financial News Agency (Asia Pacific) reported that on Friday, September 27, the Japanese Nikkei Average Index rose by more than 2%, benefiting from the further weakening of the yen, with strong supporters of 'Abenomics' leading in the first round of the Liberal Democratic Party leadership election.

By the closing bell, the Nikkei Index rose by 2.32% to 39,829.56 points, reaching the highest closing level since July 19, while the broader Topix Index rose by 0.73% to 2,740.94 points.

Driven by the overnight rise in US peers, Japanese chip-related stocks led the gains, with Tokyo Electron rising by 6.66%, providing the biggest boost to the Nikkei Index. Lasertec surged by 8.19%, becoming the stock with the highest increase, while Advantest rose by 4.48%.

Other major stocks also achieved considerable gains, with fast retailing, a weighty stock in the Nikkei Index, rising by 2.53%, SoftBank Group rising by 2.26%, and Daikin Industries rising by 6.28%.

Following the entry of former Defense Minister Shigeru Ishiba and former Defense Minister Shigeru Ishiba into the second round of the Liberal Democratic Party leadership election after the first round of voting, the market rose further in preparation for the successor to the current Prime Minister Fumio Kishida as party leader.

The election results were announced after the market closed, with former Defense Minister Shigeru Ishiba elected as the party leader in a runoff against Fumio Kishida.

Analysts state that the market's response to Fumio Kishida is particularly evident because she was an advocate of the 'Abenomics' stimulus policy of late former Prime Minister Shinzo Abe and openly opposed further interest rate hikes.

"Her advocacy for monetary easing and fiscal stimulus is bullish for the stock market," said Masahiro Ichikawa, Chief Market Strategist at Sumitomo Mitsui DS Asset Management Company.

He pointed out that under such policies, the yen tends to weaken, yields tend to decline, making it easier for stock prices to rise.

The yen fell to a low of 146.495 since the beginning of the month, which is beneficial for exporters because when they repatriate funds domestically, the weaker yen leads to higher returns. Markets expect a victory for Takaichi Sanae.

Analysts say that after the market closed, Shigeru Ishiba's victory over Takaichi Sanae in the election could drag down market performance in the short term.

In the election, Shigeru Ishiba won 215 votes—189 from LDP members and 26 from local LDP branches. Meanwhile, Takaichi Sanae received 194 votes. In the previous first round of voting, Ishiba garnered 154 votes among 8 other candidates, securing 181 votes in the final face-off against Takaichi Sanae.

Shigeru Ishiba has long been renowned as an expert in defense issues and regional revitalization, placing him at the top of media polls ahead of the general election. He is considered one of the best candidates to lead the party, both among the public and LDP branch members.