Japanese financial markets erupted in optimism Monday morning as the Nikkei index surged beyond 5%, momentarily breaching the unprecedented 57,000-point threshold. This remarkable rally follows Prime Minister Sanae Takaichi’s Liberal Democratic Party (LDP) achieving a watershed electoral triumph that reshapes Japan’s political landscape.
The LDP secured a commanding 316 seats in Sunday’s lower house election, marking the first time since 1947 that any single party has captured a two-thirds parliamentary majority. Combined with their coalition partner Japan Innovation Party’s 36 seats, the governing alliance now controls an overwhelming 352 seats in the 465-member chamber.
This resounding mandate represents a calculated political gamble that has spectacularly paid off for Takaichi, who now faces the formidable challenge of revitalizing Japan’s stagnant economy while addressing mounting cost-of-living pressures. The decisive victory enables the prime minister to advance her pro-business agenda without extensive negotiations with opposition parties.
In her post-election remarks, Takaichi committed to pursuing a ‘responsible yet aggressive’ fiscal approach while maintaining her current cabinet, formed just four months ago. Her decision to call snap elections shortly after assuming office in October has yielded stunning results, contrasting sharply with her predecessors who presided over the LDP’s loss of parliamentary majority amid corruption scandals and economic difficulties.
Market analysts anticipate Takaichi’s policies could inject new vitality into the Japanese economy. Investment strategist Yuka Marosek noted that the election outcome, coupled with anticipated stimulus measures, tax adjustments, and deregulation initiatives, would provide ‘additional fuel for an existing bull trend.’
The victory reflects Takaichi’s unique political appeal, having consolidated support among the LDP’s conservative base through traditional values and constitutional revision goals while simultaneously connecting with younger voters through unconventional cultural markers like her distinctive handbags and pink pens.
International recognition came swiftly, with former US President Donald Trump congratulating Takaichi on his Truth Social platform, recalling his endorsement and characterizing the Japanese electorate’s enthusiasm as worthy of his ‘strong support.’ The prime minister is scheduled to visit Washington in March for her second meeting with Trump, building on their diplomatic rapport established during his October visit to Japan.