Japan’s Nikkei 225 surged 5.5% to an all-time high of 57,757 points Monday as markets welcomed Prime Minister Sanae Takaichi’s decisive election victory. The broader TOPIX index jumped 3% to 3,820.76 points, its strongest opening since 2022. Investors bet on accelerated fiscal stimulus after Takaichi’s coalition secured a supermajority with 352 lower house seats, enabling her to bypass legislative gridlock.

Takaichi’s Liberal Democratic Party captured 316 seats alone, its best performance in decades. Analysts expect rapid implementation of her agenda, including infrastructure spending, defense upgrades, and a consumption tax cut aimed at boosting consumer demand. Industrial and retail stocks led gains, reflecting expectations for construction projects and increased household spending.

Bank of America analysts noted the election removed a key market uncertainty, while Japanese corporate fundamentals remain strong. The rally extended a 12-month uptrend fueled by cheap valuations and corporate governance reforms. However, the yen pared early gains despite rising 0.3% Monday, still down 8% this quarter amid concerns about debt sustainability.

Skepticism persists over how Takaichi will fund her plans without exacerbating Japan’s public debt, already at 263% of GDP. Bond markets remain volatile, with 10-year yields spiking 15 basis points last week. The prime minister must balance stimulus with fiscal discipline to maintain investor confidence in coming months.

Quick Fact: The Liberal Democratic Party secured 316 of 465 lower house seats.