Global markets opened the week with a burst of political and technology-driven momentum.
Investors reacted to a sweeping election victory of Sanae Takaichi in Japan, fresh gains in Asian equities, political turbulence in the UK, and a rally in Chinese artificial-intelligence shares following a new product launch from ByteDance.
Japan election landslide strengthens Takaichi’s mandate
Japanese Prime Minister Sanae Takaichi secured a decisive victory in a snap general election, giving her ruling Liberal Democratic Party (Japan) its largest post-war parliamentary win.
Public broadcaster NHK reported the party won 316 seats in the 465-member lower house, while the broader ruling coalition captured 352 seats — well above a two-thirds supermajority threshold.
The outcome dramatically reshapes Japan’s political landscape.
Takaichi had tied her leadership to the election result, pledging to step down if the coalition failed to win a majority.
Instead, the result consolidated her authority and strengthened the government’s ability to pass legislation, including potentially revisiting constitutional changes.
Markets reacted quickly. The Nikkei 225 surged as much as 5.7%, while yields on Japan’s 10-year government bond jumped to 2.275%.
The yen initially weakened toward ¥157 per dollar before recovering slightly.
Investors interpreted the mandate as support for expansionary fiscal policy.
Takaichi has signaled increased spending, potential food tax relief, and tolerance for a weaker currency, though she later said her comments on the yen were misinterpreted.
Economists noted the stronger political footing could allow swift policy action but may also fuel inflation pressures and complicate monetary policy decisions by the Bank of Japan.
Asian equities rally on policy and rate-cut optimism
Asian equities broadly followed Japan higher as investors bet on stronger policy support and relief from last week’s volatility in US technology shares. Regional stocks rose alongside a rebound in American chipmakers.
The Nikkei led gains, climbing about 5.7% to fresh highs, while MSCI’s Asia-Pacific index outside Japan advanced 2.2%.
South Korea’s tech-heavy benchmark jumped 4.02%, and Chinese blue-chip shares added 1.3%.
Analysts said political stability in Japan could accelerate investment in areas such as semiconductors, artificial intelligence, and energy security.
However, expectations of government borrowing pushed two-year Japanese bond yields to their highest level since 1996 at 1.3%.
Commodity markets also rallied, with silver gaining 4.4% and gold rising above $5,000 an ounce.
Starmer faces pressure after top aide resigns
In the UK, Prime Minister Keir Starmer faced mounting political pressure after his chief of staff, Morgan McSweeney, resigned amid controversy over the appointment of Peter Mandelson as ambassador to Washington.
McSweeney, a key architect of Labour’s 2024 election victory, accepted responsibility for advising the appointment following revelations regarding Mandelson’s past ties to Jeffrey Epstein.
His departure leaves Starmer politically exposed at a time of weak polling and internal party criticism.
Financial markets are watching closely.
Investors have previously reacted negatively to the prospect of leadership changes, fearing less commitment to fiscal discipline.
UK government bond traders are expected to monitor the situation as uncertainty surrounding Starmer’s leadership persists.
ByteDance AI launch lifts Chinese tech and media stocks
Technology developments also influenced markets after ByteDance launched its AI video generation model Seedance 2.0.
The product impressed analysts with its ability to generate clips from text, images, audio, and video inputs.
The announcement triggered a rally in Chinese media and entertainment shares. COL Group surged to its daily trading limit, while Shanghai Film and Perfect World each gained around 10%.
The CSI 300 Index rose 1.4%.
Analysts described the launch as potentially a “singularity moment” for film and television production, arguing that companies with strong intellectual property and user traffic could benefit most.
The response adds to broader investor enthusiasm for domestic AI technologies in China’s equity market.
The post Morning brief: Takaichi wins Japan election, Starmer’s chief of staff quits appeared first on Invezz
