Japanese shares soared to unprecedented levels in early session on Monday, driven by strengthened political stability after the Liberal Democratic Party, under Prime Minister Sanae Takaichi, secured a significant electoral victory. Investors responded positively to the outcome, which signaled policy continuity and heightened the appeal of the country’s equities.
The Nikkei 225 index surged by 5.6% to close at a record 57,337, while the Topix index climbed more than 3%, also reaching an all-time high. Market participants viewed the landslide result as supportive of ongoing economic measures, contributing to robust gains in Japanese stocks across the session.
The LDP, under Takaichi’s leadership, won 316 seats in the 465-member lower house—a level of support unmatched by any single party since the end of World War II. When combined with coalition ally Japan Innovation Party’s seats, the ruling bloc holds 352 seats overall, giving it the ability to override the upper chamber on key legislative issues, including budgets.
This outcome follows Takaichi’s decision to call an early election, which some had described as a political risk. The outcome, however, provided her administration with a stable foundation and a clear mandate from the public. The Central Reform Alliance, previously the largest opposition force, suffered substantial losses, dropping from 167 to just 49 seats.
Political observers point to Takaichi’s popularity—evidenced by approval ratings above 70%—as a major factor in the landslide, along with her appeal to younger voters through social media engagement.
With this strengthened position, Takaichi’s government is poised to advance several major initiatives. Priorities include implementing tax cuts and increasing government spending—moves that have prompted market attention given Japan’s public debt levels. Defense and security policy is also expected to shift, with Takaichi advocating greater defense spending and possible constitutional amendments related to Japan’s pacifist stance.
