Japanese equities jumped to a fresh record at the start of trading on Monday, buoyed by a sweeping election victory for Prime Minister Sanae Takaichi’s Liberal Democratic Party.
The LDP captured 316 of the 465 seats in Sunday’s general election, marking the first time since 1947 that a single party has secured a two-thirds majority in Japan’s lower house under the current parliamentary system.
Its coalition ally, the Japan Innovation Party, won 36 additional constituencies, lifting the bloc’s combined strength in the chamber to 352 seats.
The emphatic result vindicated Takaichi’s decision to call a snap poll and hands her a strong mandate as she confronts the twin challenges of economic stagnation and rising living costs.
Reflecting investor optimism, the Nikkei index surged more than 5% in early Monday trading, briefly topping the 57,000 level for the first time.
With a dominant majority, the LDP is expected to push ahead with Takaichi’s pro-business agenda without the need for prolonged negotiations with opposition parties.
Speaking to reporters on Sunday, Takaichi said she would pursue a “responsible yet aggressive” fiscal approach and confirmed she would not reshuffle her Cabinet, which was appointed less than four months ago.
Japan’s first female prime minister called the election just weeks after assuming office in October, a move that contrasts sharply with the tenure of her two predecessors, during which the party lost its majority amid corruption scandals and escalating prices.
Market analysts say the new administration’s direction could provide momentum for the Japanese economy.
The result, along with potential measures such as “stimulus, tax tweaks, and deregulation,” will act as “additional fuel for an existing bull trend,” investment analyst Yuka Marosek told the BBC.
Japan’s long history of low inflation has left households particularly exposed to recent increases in living costs.
Voters interviewed by the BBC at polling stations said they were concerned about the rising prices of everyday essentials, including food and rent.
Economic pressures are also mounting from Japan’s ageing population, which has reduced the size of the workforce while driving up social welfare spending.
Takaichi has promised tax cuts and higher public spending to spur growth, though questions remain over funding sources given Japan’s already elevated public debt. Critics warn that such policies could heighten risks in an economy they describe as fragile.
“We bear an extremely heavy responsibility to focus on steadily delivering on the campaign pledges we have made,” Takaichi said on Sunday as the scale of the victory became clear, according to Kyodo.
Under her predecessor, Shigeru Ishiba, the LDP had lost its parliamentary majority, prompting Takaichi to rely heavily on her personal appeal to restore the party’s standing.
She has strengthened support among conservative voters by reviving long-standing ambitions such as revising Japan’s pacifist constitution and stressing traditional values.
At the same time, she has struck a chord with younger voters in an unexpected way, with her handbags and pink pens emerging as unlikely cultural talking points.
US President Donald Trump congratulated Takaichi on her win, writing on Truth Social that it was an “Honor” to endorse her ahead of the election.
“The wonderful people of Japan, who voted with such enthusiasm, will always have my strong support,” Trump said.
Just a week after Takaichi took office last October, Japan hosted Trump on an official visit, marking her first major diplomatic engagement. Images of the two leaders, with fists raised as Trump addressed thousands of US troops, drew widespread attention.
Takaichi is scheduled to travel to Washington in March for a second meeting with the US president.
