Japanese shares hit record high as Sanae Takaichi wins landslide election victory

"Japan's stock market has hit a record high after Sanae Takaichi's Liberal Democratic party (LDP) secured a comprehensive victory in Sunday's election. The LDP won 316 of the 465 seats in the country's lower house the first time a single party has secured two-thirds of the lower house since the establishment of Japan's parliament in 1947. The Japan Innovation party, the LDP's coalition partner, won 36 further seats, giving a supermajority of 352 seats."

"The landslide victory eases the legislative agenda for Takaichi who is Japan's first female prime minister and called a snap election in January as she can override the upper chamber, which she does not control. Japanese stocks rose, bonds fell and the battered yen recovered some ground on Monday after the LDP's win was seen as enabling decisive action on fiscal stimulus."

"Takaichi hopes to push through a 21tn yen (99bn) stimulus package, and has promised to suspend Japan's 8% sales tax on food for two years. Investors have balked at the lack of clarity over how Japan, which has the highest debt burden in the developed world, would fund the proposal. The uncertainty has triggered a sell-off in government bonds and pushed the yen towards historic lows against other currencies."

Sanae Takaichi's Liberal Democratic Party won 316 of 465 lower-house seats, and the Japan Innovation party added 36 seats, creating a coalition supermajority of 352 seats. The supermajority allows the government to override the upper chamber and eases passage of legislation. Markets reacted strongly: the Nikkei hit record highs, regional Asian markets rose, government bonds fell, and the yen recovered some losses to trade around 156.43 per dollar. Takaichi plans a 21tn yen stimulus and a two-year suspension of the 8% food sales tax, but investors remain concerned about how that spending would be funded given Japan's high debt.

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