Sanae Takaichi’s win paves the way for promised tax relief and big fiscal spending that have spooked markets since she came to power last year.

Japan's Prime Minister and President of the Liberal Democratic Party (LDP) Sanae Takaichi places a red paper rose on the name of an elected candidate at the LDP headquarters during the House of Representatives election in Tokyo on Feb 8, 2026. (Photo: Kim Kyung-Hoon/Pool/AFP)

TOKYO: Japanese stocks jumped to record peaks while bonds slid and the yen sagged to an all-time low against the Swiss franc after Prime Minister Sanae Takaichi scored a landslide win in Sunday's (Feb 8) snap election.

Takaichi's Liberal Democratic Party won 316 of the 465 seats in parliament's lower house, giving her the mandate to push through her big spending plans and promised tax relief without negotiating with other parties. The so-called supermajority also allows the LDP to pass legislation without upper house approval.

The Nikkei 225 share average rallied 5.7 per cent to an unprecedented 57,337.07 by 12.30am GMT (8.30am, Singapore time).

The broader Topix advanced 3.4 per cent to a record 3,825.67.

Subscribe to our Chief Editor’s Week in Review Our chief editor shares analysis and picks of the week's biggest news every Saturday. This service is not intended for persons residing in the E.U. By clicking subscribe, I agree to receive news updates and promotional material from Mediacorp and Mediacorp’s partners. Loading Ten-year Japanese government bond yields rose as much as 4.5 basis points (bps) to 2.275 per cent, and 30-year JGB yields climbed as much as 6.5 bps to 3.615 per cent. Other tenors are yet to trade. Bond yields rise when prices fall.

"The size of majority gives clarity for Japan on the direction ahead: short term, markets adjust and are assuming weaker yen and potentially higher yields across the curve," said George Boubouras, head of research at K2 Asset Management.

"But once policies are lined up with the new massive majority, the yen should hold up again."

From a policymaking perspective, Takaichi's big win may be the best result for bond investors, because the LDP won't need to compromise with opposition parties targeting even deeper tax relief and broader fiscal stimulus.

The 30-year JGB yield surged to a record 3.88 per cent last month when Takaichi initially pledged to suspend the tax on food for two years, but has been well below that for the past two weeks.

The yen eased as much as 0.3 per cent to reach 203.30 per franc for the first time ever on Monday.

Japan's currency declined 0.4 per cent to 186.55 per euro, putting it close to the record low of 186.86 from last month. It fell 0.5 per cent to as low as 157.95 per US dollar, a two-week trough.

For now, however, Japan's top currency diplomat Atsushi Mimura appears to have put a floor under the yen, saying the government is "closely watching currency movements with a high sense of urgency" in a warning about potential yen-buying intervention.

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