Japanese stocks surged to a record high on Monday as markets reacted to Prime Minister Sanae Takaichi’s sweeping election victory, which delivered an unprecedented parliamentary mandate for her Liberal Democratic Party (LDP).
The Nikkei 225 index rallied more than 5 per cent in early trading, briefly crossing the 57,000 mark for the first time, as investors welcomed political stability and the prospect of pro-business reforms.
In Sunday’s election, the LDP secured 316 of the 465 seats in the lower house, marking the first time a single party has won a two-thirds majority since Japan’s parliament was established in its current form in 1947. The party’s coalition partner, the Japan Innovation Party, won an additional 36 seats, bringing their combined total to 352.
The emphatic result represents a calculated gamble that paid off for Takaichi, who called a snap election last month just weeks after becoming Japan’s first female prime minister. Her victory contrasts sharply with the fortunes of her two immediate predecessors, under whom the LDP lost its majority amid corruption scandals and struggled to rein in rising living costs.
The decisive mandate now gives Takaichi room to advance her economic agenda without prolonged negotiations with opposition parties. Speaking on Sunday, she said her government would pursue a “responsible yet aggressive” fiscal policy and confirmed she would not reshuffle a cabinet formed less than four months ago.
Market analysts say the election outcome has strengthened investor confidence. Yuka Marosek, an investment analyst, told the BBC that expectations around stimulus measures, tax adjustments and deregulation could provide “additional fuel for an existing bull trend” in Japanese markets.
Despite historically low inflation, Japan has become increasingly sensitive to rising living costs in recent years. Voters told the BBC at polling stations that higher grocery prices and rent were key concerns during the campaign. The economy is also under strain from an ageing population, a shrinking workforce and growing social welfare costs.
Takaichi has pledged to cut taxes and boost growth through increased public spending, though critics have questioned how such plans would be financed given Japan’s already high government debt. Some warn that aggressive fiscal expansion could add to instability in an economy still considered fragile.
“We bear an extremely heavy responsibility to focus on steadily delivering on the campaign pledges we have made,” Takaichi said, according to Kyodo News, as the scale of the victory became clear.
Within the LDP, Takaichi has consolidated support among conservative members by reviving long-standing goals such as revising Japan’s pacifist constitution and emphasising traditional values. At the same time, she has struck an unexpected chord with younger voters, with her distinctive handbags and pink pens becoming unlikely symbols of her rise.
International reaction was swift. US President Donald Trump congratulated Takaichi on her win, calling it an “honor” to have endorsed her ahead of the election. Just a week after she took office last October, Takaichi hosted Trump in Tokyo in a high-profile diplomatic debut.
She is scheduled to travel to Washington in March for a second meeting with the US president, as her government seeks to translate electoral momentum into economic revival and stronger international partnerships.
Melissa Enoch
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