World stocks climb, Nikkei soars on Japan PM Takaichi's big poll win

World shares advanced, and Tokyo's Nikkei 225 share index jumped as much as 5 per cent to a record on Monday after Japanese Prime Minister Sanae Takaichi's governing party secured a two-thirds supermajority in a parliamentary election.

In early European trading, Germany's DAX gained 0.6 per cent to 24,864.59, while the CAC 40 in Paris edged 0.2 per cent higher, to 8,288.06. Britain's FTSE 100 was up 0.3 per cent at 10,399.61.

US futures edged higher after the US stock market roared back on Friday as technology stocks recovered much of their losses from earlier in the week and bitcoin halted its plunge. The future for the S&P 500 added 0.1 per cent, while that for the Dow Jones Industrial Average was up 0.2 per cent.

 

On Friday, the S&P 500 rallied 2 per cent for its best day since May. The Dow industrials soared 2.5 per cent, topping the 50,000 level for the first time. The Nasdaq composite leapt 2.2 per cent.

The combination of a rebound in tech shares, Wall Street's rally and other upbeat news lifted shares early Monday.

In Tokyo, the Nikkei 225 closed 3.9 per cent higher at 56,363.94. Earlier in the day, the benchmark hit a new intraday record of 57,337.07.

The dollar weakened slightly against the Japanese yen, trading at 156.71 yen, down from 157.10 yen late Friday.

The landslide election victory gives Takaichi a much stronger mandate to pursue market-friendly policies.

NHK, citing results of vote counts, said Takaichi's Liberal Democratic Party, or LDP, alone secured 316 seats by early Monday, comfortably surpassing a 261-seat absolute majority in the 465-member lower house, the more powerful of Japan's two-chamber parliament. That marks a record since the party's foundation in 1955 and surpasses the previous record of 300 seats won in 1986 by late Prime Minister Yasuhiro Nakasone.

"So overall, as the LDP has gone from a very weak government that really couldn't do anything to an extremely strong government now with the supermajority of the lower house, they really could call the shots," said Neil Newman, managing director and head of strategy at Astris Advisory Japan.

Takaichi's first major task when the lower house reconvenes in mid-February is to work on a budget bill, delayed by the election, to fund economic measures to address rising costs and sluggish wages.

"Japan just delivered the kind of election result markets instinctively embrace because it removes the one thing traders price at a premium: political ambiguity," Stephen Innes of SPI Asset Management said in a commentary.

"Politically, the win hands Prime Minister Takaichi freedom of movement and removes the need to bargain every decision down to the lowest common denominator," he said.

Other markets across Asia also rallied.

In Seoul, the Kospi gained 4.1 per cent, to 5,298.04, buoyed by strong buying of tech shares.

Hong Kong's Hang Seng index climbed 1.8 per cent to 27,027.16, and the Shanghai Composite index rose 1.4 per cent to 4,123.09. Taiwan's Taiex gained 2 per cent.

In Australia, the S&P/ASX 200 surged 1.9 per cent to 8,870.10.

Gains for computer chip companies helped drive Wall Street's widespread rally on Friday. NVIDIA jumped 7.8 per cent, and Broadcom climbed 7.1 per cent.

The S&P 500 still fell to its third losing week in the last four. Apart from worries about spending by Big Tech companies, which are Wall Street's most influential stocks, concerns about AI potentially stealing customers from software companies also hurt the market. Software stocks were hit particularly hard after AI firm Anthropic released free tools to automate things like legal services.

In other dealings early Monday, bitcoin gained 1 per cent to trade just below USD 70,000. A weeklong plunge sent it to close to USD 60,000 late Thursday, more than halfway below its record price set in October.

Prices in the metals market have calmed a bit following their own wild swings. Gold rose 1.4 per cent to USD 5048.90 per ounce, while silver added 6.2 per cent to USD 81.64.

US benchmark crude oil shed 60 cents to USD 62.95 per barrel. Brent crude, the international standard, gave up 60 cents to USD 67.45 per barrel.

The euro rose to USD 1.1866 from USD 1.1814.