Japanese Stocks Hit Record After Takaichi’s Historic Election Win

Japanese shares surged to record highs on Monday after Prime Minister Sanae Takaichi secured a landslide election victory, giving her ruling Liberal Democratic Party (LDP) a commanding mandate to push through pro-business reforms. The Nikkei 225 jumped more than 5% in early trading, briefly crossing the 57,000 mark for the first time, before paring gains to close up 3.9% at a record 56,363.94. Sunday’s snap election delivered the LDP 316 of 465 seats in the lower house, the first time a single party has won a two-thirds majority since Japan’s parliament took its current form in 1947. With coalition partner Japan Innovation Party adding 36 seats, the ruling bloc now controls 352 seats.

Markets welcomed the decisive outcome, which analysts say will allow Takaichi to advance policies such as fiscal stimulus, tax cuts and deregulation with minimal opposition. The prime minister said she would pursue a “responsible yet aggressive” fiscal approach and ruled out a cabinet reshuffle. Investors have responded positively to Takaichi’s pledges to end austerity and increase investment, particularly in strategic sectors like defence and artificial intelligence. However, concerns remain over how new spending will be financed, given Japan’s already high government debt. Bond and currency investors remain cautious.

Takaichi, Japan’s first female prime minister, called the election just months after taking office in October, reversing the LDP’s decline under her predecessors. While she has rallied the party’s conservative base, she has also attracted younger voters, becoming an unexpected cultural figure during the campaign. The new government faces mounting challenges, including rising living costs, an ageing population and a shrinking workforce. Voters cited higher food and rent prices as key concerns. US President Donald Trump congratulated Takaichi on her victory and said he looked forward to continued cooperation. She is expected to visit Washington in March for further talks.

With markets buoyant and political power consolidated, attention now turns to whether Takaichi can translate her strong mandate into sustained economic recovery.