Soon after, the Japanese Prime Minister Sanae Takaichi’s Liberal Democratic Party LDP basked in a historic election victory, Japan’s stocks surged to a record high.
The LDP secured 316 out of 465 seats in Sunday’s election.
It is the first time a single party has won a two-thirds lower house majority since Japan’s parliament was established in its current form in 1947.
In addition to that, the Japan Innovation Party and LDP’s coalition partner won in 36 more constituencies, taking their combined total to 352 seats.
The resounding mandate is a gamble that paid off for Takaichi, who now faces the challenge of reviving Japan’s moribund economy and tackling cost-of-living woes.
Why it matters:
The Nikkei 225 index rallied by more than 5% in early trade on Monday, February 9, 2026, briefly crossing the 57,000 mark for the first time, reports BBC.
It then gave up some gains but still closed up 3.9% at a record high of 56,363.94.
The LDP’s decisive win will help Takaichi advance her pro-business policies without having to negotiate extensively with opposition parties.
Takaichi also informed that she would pursue a “responsible yet aggressive” fiscal policy and would not reshuffle the Cabinet, which was formed less than four months ago.
Japan’s first female prime minister called the snap election last month, just a few months after taking office in October 2025.
Her success is in marked contrast to her two predecessors, under whom the party lost its parliamentary majority, battled corruption scandals and struggled to curb rising costs.
Market analysts also reviewed that Takaichi’s policies could boost the Japanese economy.
The election outcome and upcoming moves like “stimulus, tax tweaks, and deregulation” will be “additional fuel for an existing bull trend,” investment analyst Yuka Marosek told the BBC.
Chris Scicluna, head of research at Daiwa Capital Markets Europe, said Japanese stock investors had “long been believers in Takaichi.”
“They’re confident that Japanese firms will benefit from her pledge to end austerity, they love her promises of more investment to boost growth, [and] they like the fact she’s identified several strategic sectors such as defence and AI to benefit from extra policy support,” Chris told BBC during a programme.
However, he added that investors in Japanese government bonds and the yen were “a lot more agnostic, if not downright skeptical” about Takaichi’s intentions.
“Japanese government debt is extremely high, and investors in bonds and the yen want to know how she intends to finance her plans,” he said.
Historically low inflation in the country has made it very sensitive to the rising cost of living over recent years.
At this election, voters at polling stations told the BBC that they were worried about the increasing costs of groceries and rent.
The economy is also under pressure from the country’s aging population, which has seen a shrinking workforce and ballooning social care costs.
Takaichi’s Vision:
Takaichi has pledged to cut taxes and boost the Japanese economy through more spending—though where that money will come from is another big concern, given Japan’s high government debt. Critics warn this could deepen instability in Japan’s already fragile economy.
“We bear an extremely heavy responsibility to focus on steadily delivering on the campaign pledges we have made,” Takaichi said on Sunday as her party’s victory became clear, Kyodo reported.
The LDP had lost its parliamentary majority under Takaichi’s predecessor, Shigeru Ishiba. And Takaichi banked on her personal appeal to turn the LDP’s lost fortunes around.
She has consolidated support among the LDP’s conservative base by reviving long-dormant goals like revision to Japan’s pacifist constitution and emphasizing traditional values.
