(Bloomberg) -- Shinzo Abe's victory in the December 2012 Japanese election marked the start of a six-month rally in the Nikkei 225 that saw gains of more than 50 percent by mid year.
The initial market reaction to that event, with the new prime minister promising a raft of reforms, was to buy equities and sell the yen. If we strip out the yen effect and look at the index's first post-Abe month in dollar-adjusted terms, the Nikkei 225's trajectory maps closely onto that of the S&P 500 in its first month since Donald Trump's election.
The chart does show that relationship breaking down as the Nikkei suffered a reversal in mid-January 2013, ahead of a Bank of Japan meeting. But the reversal proved short-lived, as we can see in a six-month chart of the index — again priced in dollars.
If President-elect Donald Trump's promises to reinvigorate the economy carry as much weight as Shinzo Abe's did (as put forth by David Woo on BloombergTV yesterday) then there may still be considerable upside for U.S. stocks, presuming history is any guide.
Note: This article is based on Joe Weisenthal's market's morning email paragraph, which you can sign up for here.