UBS On-Air: Market Moves UBS On-Air: Paul Donovan Daily Audio 'Pro-growth policies?'
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Oct 6, 2025 The recent election of Takaichi as Japan's Prime Minister presumes a shift towards pro-growth policies, igniting market optimism. Her skepticism about Japan's inflation persistence may delay a Bank of Japan rate hike. Meanwhile, France faces political risk with little change in Macron's cabinet, as Le Pen raises concerns. Additionally, the influence of flexible work is reshaping investment trends in the UK, reducing the demand for new commercial buildings.
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Takaichi's Rise Boosts Stocks
- Japan's LDP picked Takaichi, making her virtually certain to be the next Prime Minister and boosting equities.
- Her pro-growth stance and skepticism about persistent inflation may delay Bank of Japan rate hikes.
Inflation Skepticism Could Delay BOJ
- Takaichi questioned the sustainability of recent Japanese inflation, noting core inflation has been modest and stable.
- Emphasizing demand-pull inflation suggests her administration could press for a later BOJ rate increase.
Macron's Cabinet Raises Political Risk
- President Macron largely reappointed his previous cabinet, with only a cosmetic change to the finance minister.
- Markets may price increased political risk if investors fear this government could collapse again amid far-right opposition.