Japan's Prime Minister Loses Control of Upper House: Impact on Stock Market

The **Nikkei 225** is a prominent Japanese stock market index that measures the performance of **225 large, publicly traded companies** listed on the Tokyo Stock Exchange (TSE). Established on July 9, 1950, it is Japan’s oldest and most widely recognized stock index, serving as a key barometer for the Japanese economy and a benchmark for investors globally[1][3][5]. Unlike market-capitalization-weighted indices, the Nikkei 225 is **price-weighted**, meaning companies with higher stock prices exert a greater influence on the index's movement. This characteristic makes it unique compared to indices like the S&P 500. The index includes major multinational corporations such as **Toyota, Sony, Panasonic, Canon, and Nissan**, spanning across 35 to 36 industries, with technology and industrial sectors being the most heavily weighted[1][2][3][6]. Historically, the Nikkei 225 has reflected Japan’s post-war economic recovery and subsequent boom periods. It gained global prominence as Japan emerged as an economic powerhouse. The index experienced a prolonged decline after the 1990s asset bubble burst but began recovering gradually, reaching a milestone near 40,000 points in early 2024, a level unseen in 34 years, signaling renewed investor confidence and economic strength[5]. The Nikkei 225 is reviewed annually in September, with adjustments implemented in October to ensure it reflects current market conditions. It serves multiple roles: an economic indicator for policymakers, a sentiment gauge for investors, and the basis for various financial products such as ETFs and futures contracts, facilitating market access to Japan’s economy as a whole[1][2][7][8]. Notably, the Bank of Japan has played a significant role in the index’s recent history by holding a large share of ETFs linked to the Nikkei, influencing market dynamics. The Nikkei 225 remains a vital tool for tracking Japan’s economic health an