Japanese stocks have surged to record highs after Prime Minister Sanae Takaichi’s historic election victory delivered investors a rare dose of political certainty, fueling optimism across Asian markets already buoyed by a Wall Street rally.
Tokyo’s benchmark Nikkei 225 jumped more than five percent at one point on Monday, breaking through the 57,000 mark for the first time, as markets welcomed Takaichi’s commanding mandate and the prospect of aggressive fiscal stimulus. The yen also strengthened alongside the equity surge.
Takaichi’s Liberal Democratic Party secured roughly a two-thirds majority in the lower house, clearing the path for expansive spending plans and sweeping tax cuts in the world’s fourth-largest economy.
“We will prioritise the sustainability of fiscal policy. We will ensure necessary investments,” Takaichi said as results came in on Sunday. “Public and private sectors must invest. We will build a strong and resilient economy.”
Near-term political risk removed
Analysts said the scale of the victory removed near-term political risk.
“This gives Takaichi the mandate she was looking for for her big-spending agenda,” said Kyle Rodda of Capital.com, noting that equities stand to benefit from higher fiscal outlays alongside accommodative interest rates.
Charu Chanana of Saxo Markets said decisive election wins typically lift markets by reducing uncertainty, though she cautioned that the longer-term picture could be more complex if debt levels rise sharply or fiscal ambitions expand too far.
For now, investors appeared unconcerned. Gains spread across the region, with Hong Kong, Shanghai, Sydney, Singapore and Taipei all posting strong advances.
Rally follows strong Wall Street finish
Seoul climbed more than four percent, driven by a six percent jump in Samsung shares after reports it would begin mass production of next-generation HBM4 memory chips.
The rally followed a strong finish on Wall Street last week, where the Dow Jones Industrial Average crossed 50,000 points for the first time amid optimism about the US economy and potential interest rate cuts.
Elsewhere, gold and silver steadied after sharp recent swings, while oil prices edged lower as geopolitical tensions eased following nuclear talks between Iran and the United States in Oman, which Tehran described as “a step forward.”
