By Kosaku Narioka


Japan's Nikkei Stock Average rose to a record intraday high after Prime Minister Sanae Takaichi's landslide election win boosted expectations that she will pursue drastic fiscal changes to strengthen Japan's economy.

The Nikkei Stock Average was recently 5.1% higher at 57033.88, after hitting an all-time intraday high of 57337.07 earlier on Monday.

Electronics, semiconductor and industrial stocks were leading the gains. Chip-testing equipment maker Advantest was last up 15%, SoftBank Group rose 7.7% and industrial giant Hitachi Ltd. was 6.1% higher.

Takaichi's Liberal Democratic Party and its coalition partner, the Japan Innovation Party, were on track to win at least two-thirds of the lower-house seats in Japan's parliament, according to initial results and projections by public broadcaster NHK.

The prime minister plans to step up defense and industrial spending, with a focus on artificial intelligence and nuclear fusion technology, among other things. She has also pledged to lower the ratio of government debt relative to the country's gross domestic product.

The 10-year Japanese government bond yield was up 4.5 basis points at 2.275%. The Japanese yen strengthened against the dollar, most recently trading at 156.86 to the greenback, compared with 157.21 late Friday in New York.

"Worries over Japan fiscal profligacy are overdone given that growth comfortably exceeds borrowing costs," said Elias Haddad, global head of markets strategy at Brown Brothers Harriman. Japan's mix of loose fiscal policy and tighter monetary policy is positive for the yen, Haddad said.

Morningstar DBRS analysts said in a note that they expect Takaichi to advance the fiscal policy objectives she promised during the campaign, including a temporary suspension of the consumption tax on food items to ease household cost pressures.

"A key challenge for the Takaichi administration will be to maintain a constructive economic relationship with Beijing while balancing her aim to deepen ties with the United States and other regional allies," the analysts said.

Bilateral relations with China, one of Japan's largest trading partners, have deteriorated since Takaichi took office in October.


Write to Kosaku Narioka at kosaku.narioka@wsj.com


(END) Dow Jones Newswires

02-08-26 2048ET