Nikkei led the gains with a rise of 4.1% to all-time highs as the government’s decisive majority clears the way for more spending and tax cuts

Asian markets jumped on Monday as a resounding win for Japanese Prime Minister Sanae Takaichi whetted appetites for more reflationary policies.

Nikkei led the gains with a rise of 4.1% to all-time highs as the government’s decisive majority clears the way for more spending and tax cuts.

The victory gives Takaichi a stable majority, enabling decisive action on fiscal stimulus, AI, semiconductors, energy security, and strategic reforms, said Marc Jocum, a senior investment strategist at Global X ETFs Australia.

Japan was long seen as a contrarian investment, but is now a reform story with meaningful momentum, he added. Political stability, improving returns on capital, domestic capital deployment and reasonable valuations all point in the same direction.

The prospect of more borrowing, however, pushed two-year Japanese government bond yields up to their highest since 1996 at 1.3%.

MSCI’s broadest index of Asia-Pacific shares outside Japan gained 2.1%, while South Korea’s tech-heavy index jumped 3.8%.

Chinese blue chips added 1.3%, ahead of inflation figures due on Wednesday that are expected to show a pullback in food prices and continued deflation in producer prices.

As for Europe, EUROSTOXX 50 futures firmed 0.3%, as did DAX futures, while FTSE futures advanced 0.4%.

In U.S., S&P 500 futures added 0.1% and Nasdaq futures rose 0.2%, having both bounced more than 2% on Friday to break a run of heavy losses.

Bargain hunting in beaten-down momentum plays including silver also helped shore up sentiment, as did wagers of more policy easing from the U.S. central bank.

A rate cut by June is now seen as an odds-on bet, with a slew of economic data this week on jobs, inflation and spending expected to reinforce the case for stimulus.