Asia Markets Rally on Takaichi Election Win

Tokyo’s Nikkei 225 surged around 4%–5% on Monday to all-time highs after Japanese Prime Minister Sanae Takaichi’s Liberal Democratic Party secured a two-thirds supermajority in the lower house. One report cited a 4.7% gain to 56,788.85, with the index briefly topping 57,000, while another put the rise at 4.5%. The outcome gives Takaichi’s government its strongest mandate since the LDP’s founding in 1955.

Partial results indicated the LDP had secured about 316 of 465 seats, surpassing both the 261-seat absolute majority threshold and the 310 seats needed for a two-thirds majority. Together with its coalition partner, the ruling bloc is expected to hold about 352 seats, allowing it to override the upper house on key legislation.

Takaichi, Japan’s first female premier, said her administration would pursue policies to make Japan “strong and prosperous” and stressed the need for “responsible and proactive fiscal policy.” Her first major task when the lower house reconvenes in mid‑February will be advancing a delayed budget to fund measures aimed at rising costs and sluggish wages.

The decisive election result has whetted investor appetite for reflationary measures, including potential tax cuts and higher spending. One analyst noted that cutting consumption tax on food would support domestic demand, while increased military spending would benefit defence stocks. Markets have also focused on how any fiscal expansion is designed and communicated, with some suggesting associated risks had already been priced in before the vote.

In currency markets, the yen weakened as much as 0.3% to 157.72 per dollar, its seventh straight day of declines and the softest level in two weeks. Analysts said the LDP’s landslide removed political uncertainty and strengthened policy execution, shifting attention squarely to fiscal strategy. Broader dollar moves were muted, with the US dollar index flat at 97.683 at the start of a data-heavy week.

Japan’s rally helped lift regional markets. South Korea’s Kospi jumped between 3.9% and 4.5%, while MSCI’s broad Asia‑Pacific ex‑Japan index climbed about 1%. Hong Kong’s Hang Seng gained 1.5%, the Shanghai Composite rose 1%, Taiwan’s Taiex advanced 2.4%, and Australia’s S&P/ASX 200 added 1.9%.

The advance followed a strong rebound on Wall Street on Friday, when US chipmakers powered a broad rally. Nvidia rose around 7.8%–8%, Advanced Micro Devices gained more than 8%, and Broadcom climbed roughly 7%. Silver and other beaten‑down momentum trades also saw buying interest, contributing to improved risk sentiment across Asia.

In the US, the Dow Jones Industrial Average closed above 50,000 for the first time on Friday, rising more than 1,200 points, or 2.5%. The S&P 500 and Nasdaq Composite each advanced around 2%, even as the S&P 500 still logged its third losing week in four. Futures trading late Sunday and early Monday pointed to modest additional gains, with S&P 500 futures up about 0.4% and Nasdaq 100 futures up roughly 0.6%.

The rebound came after a tech-led sell‑off driven by concerns over massive AI‑related capital spending. Software stocks were hit particularly hard, with worries that AI tools, including new offerings from Anthropic, could disrupt existing business models. At the same time, investors are positioning ahead of delayed US employment and consumer price data, as well as earnings reports from companies including Coca‑Cola, McDonald’s, Cisco and ON Semiconductor, which could help shape expectations for Federal Reserve rate cuts later this year.