Japanese stocks surged to a record high on Monday, as Prime Minister Sanae Takaichi's Liberal Democratic Party (LDP) basked in a historic election victory.
The LDP secured 316 out of 465 seats in Sunday's election, the first time a single party has won a two-thirds lower house majority since Japan's parliament was established in its current form in 1947.
The Japan Innovation Party, the LDP's coalition partner, won in 36 more constituencies, taking their combined total to 352 seats.
The resounding mandate is a gamble that paid off for Takaichi, who now faces the challenge of reviving Japan's economy and tackling cost-of-living woes.
The Nikkei 225 index rallied by more than 5% in early trade on Monday, briefly crossing the 57,000 mark for the first time. It then closed up 3.9% at a record high of 56,363.94.
Takaichi, who promised to pursue responsible yet aggressive fiscal policies, noted she would not reshuffle the Cabinet formed less than four months ago. Her decisive win allows her to push pro-business policies without extensive negotiations with opposition parties.
The election outcome is expected to provide additional momentum for the Japanese economy, with analysts believing that policy changes such as stimulus measures, tax adjustments, and deregulation will further drive growth. Nevertheless, investors expressed concerns about Japan's mounting government debt, urging caution moving forward.
This marks a significant turnaround for Takaichi, who has sought to energize her party after its losses under previous leadership. With Takaichi becoming the first female prime minister, she has successfully gained traction with both conservative and younger voters alike.
As she prepares for a second meeting with U.S. President Trump, who endorsed her campaign, Takaichi is now under pressure to deliver on her election promises while navigating the complexities of Japan's economic landscape.
