Japanese Prime Minister Sanae Takaichi’s coalition won a legislative supermajority in Sunday’s election, projections show, cementing her grip on power and providing a strong mandate for her expansionary fiscal policy.
The snap election was a gamble for Takaichi, who took office in October with a goal of turning around Japan’s ruling party.
Stocks are poised to surge, with investors betting higher government spending will fuel growth, but Takaichi’s policies will likely weigh on Japanese bonds and the yen, analysts said.
A better domestic footing also gives Takaichi leeway to pursue a more assertive stance on China while maintaining a close partner in US President Donald Trump.
Beijing’s “efforts to isolate her completely failed,” an Asia Group principal said.