Japanese equities staged a broad rally today. On February 18th, with several major Asian markets closed for holidays, focus turned to Japan, where stock indices surged at the open. The Nikkei 225 index soared by over 700 points. Analysts noted that the approaching formation of a new Japanese government, combined with a stabilizing U.S. stock market overnight, prompted investors to return to Japanese equities.

Simultaneously, U.S. President Donald Trump announced that Japan has formally and practically advanced the first projects under its $550 billion commitment to invest in the United States. Three major initiatives involve Texas oil and gas strategy, power generation in Ohio, and critical minerals in Georgia. Commentary suggests these initial investments may pave the way for Takaichi Sanae's visit to the U.S. and meeting with Trump on March 19th.

The Japanese stock market opened higher and continued to gain. At the time of writing, the Nikkei 225 was up over 710 points, a rise of 1.23%, solidly holding above the 57,000-point mark and ending a previous four-day losing streak. The Topix index also advanced significantly, rising 1.3% to 3809.18 points.

The rally in Japanese shares boosted broader regional indices, with the MSCI Pacific index climbing over 1%, although trading volumes were notably light due to holiday closures in several markets.

According to the latest reports, the vote for the prime ministerial designation in Japan's House of Representatives began on the afternoon of February 18th. Earlier that day, the cabinet of Takaichi Sanae resigned collectively. Both houses of Japan's Diet were scheduled to hold prime ministerial designation elections successively.

Under relevant regulations, lawmakers can submit blank ballots in the designation vote. A candidate receiving a majority of votes in the first round wins directly. If no candidate secures a majority, including blank votes, the top two vote-getters proceed to a runoff. Should the results differ between the houses, and if consultation fails to resolve the discrepancy, the Constitution stipulates that the House of Representatives' decision prevails. The newly elected prime minister is expected to form a cabinet the same day. In the recent Lower House election, the ruling coalition of the Liberal Democratic Party and Nippon Ishin no Kai secured a majority of seats.

Public opinion widely expects Takaichi Sanae to prevail in the House of Representatives vote. Although the ruling coalition lacks a majority in the Upper House, opposition parties have not unified behind a single candidate. Even if the first round is inconclusive, Takaichi is anticipated to receive the most votes in a subsequent runoff and be elected prime minister.

Expectations that the new cabinet may continue or enhance economic stimulus measures led to a short-term rise in the USD/JPY exchange rate, which was quoted at 153.55, up 0.17%, at the time of writing.

Marcel Thieliant of Capital Economics commented that weak GDP growth in the fourth quarter might prompt further fiscal easing. The sluggish economic activity increases the likelihood that the new cabinet will not only proceed with suspending the consumption tax on food but also formulate a supplementary budget in the first half of the fiscal year starting in April, rather than waiting until late 2026.

On February 17th, U.S. time, President Donald Trump announced the launch of the first projects under Japan's $550 billion investment pledge to the United States. This marks the initial implementation of a core component of last year's tariff agreement between the two nations.

Trump stated that these initial projects focus on the energy and critical minerals sectors. Funding will be directed towards a gas-fired power plant in Ohio, a critical minerals project in Georgia, and liquefied natural gas facilities in Texas. These projects aim to revitalize the U.S. industrial base, reinforce its energy dominance, and reduce dependence on foreign sources for critical minerals.

Analysis suggests these initial investments could set the stage for Takaichi Sanae's meeting with Trump during her visit on March 19th. This investment mechanism was part of the exchange in last year's U.S.-Japan tariff agreement.

Previously, on July 22, 2025, Trump posted on social media that the U.S. and Japan had reached a trade deal, reducing a planned 25% "reciprocal tariff" rate to 15%, with Japan committing to invest $550 billion in the U.S. and open its market for agricultural products like rice.

In a social media post, Trump said: "Japan has now formally and practically advanced the first projects under its $550 billion commitment to invest in America—part of our historic trade deal to revitalize the U.S. industrial base, create hundreds of thousands of high-quality American jobs, and strengthen our national and economic security like never before."

He announced three major projects involving Texas oil and gas strategy, Ohio power generation, and Georgia critical minerals. Trump emphasized: "These projects are so big, they couldn't happen without a very special word—tariffs."

Trump claimed the Ohio gas power plant would be the "largest ever," the Gulf Coast LNG facilities would boost exports and solidify U.S. energy dominance, and the critical minerals facility would end America's "foolish dependence on foreign resources." He stated, "America is rebuilding, producing again, and winning again."

Analysis indicates the implementation of this investment agreement is likely to be a primary topic during Takaichi Sanae's visit on March 19th.

Japan's Minister of Economy, Trade and Industry, Ryo Masu Akazawa, said last week: "Takaichi Sanae and Trump have an extremely strong relationship. Looking towards achieving more fruitful results from her upcoming visit, we will continue efforts to strengthen the economic relationship in line with the mutual interests of Japan and the U.S."

Akazawa mentioned that companies like Hitachi and SoftBank Group are interested in participating in U.S. investment projects. Japan has decided to participate in three U.S. projects: a synthetic diamond project valued at approximately $600 million, a gas power generation project worth about $33.3 billion, and a crude oil infrastructure project valued at around $2.1 billion. Toshiba, Hitachi, and SoftBank are considering involvement in the gas project; Mitsui O.S.K. Lines, JFE, Nippon Steel, and Mitsui Engineering & Shipbuilding are considering the crude oil project; Asahi Diamond Industrial and Noritake Co. are proposed as off-takers for the synthetic diamond project.