Japan's ruling coalition lost its parliamentary majority, with public broadcaster NHK projecting that the Liberal Democratic Party and its Komeito partner will fall short of the 233 seats needed to win power in the country's lower house.
By 5:30 a.m. local time Monday, NHK projected the ruling bloc would secure 214 seats, with just one of the total 465 seats undeclared. The opposition Constitutional Democratic Party (CDP) and the Democratic Party for the People (DPP) made significant gains.
Nikkei Asia made similar projections, reporting that it would cast uncertainty over the newly appointed administration of Prime Minister Shigeru Ishiba. It is the first time since 2009 that the LDP has lost its parliamentary majority.
At the start of Asian trading Monday, the dollar rose against the Japanese yen amid the political volatility, up 0.5% at 153.09.
The LDP's Ishiba succeeded Fumio Kishida as prime minister on Oct. 1 and called for a snap general election on Sept. 30 after winning the party's internal vote against rival Sanae Takaichi. The LDP's election campaign was dogged by concerns over inflation, as well as corruption scandals which have divided the party. When a slush fund scandal came to light in 2023, four cabinet ministers, as well as other senior party officials, were replaced by former PM Kishida.
On the campaign trail, Ishiba had vowed to reduce the burden on households suffering from rising living costs and showed intentions to boost rural revitalization, as Japan's countryside suffers from a broader demographic crisis and an aging population.
Ishiba is now expected to hold a meeting with other top officials on Monday after the election drubbing.
David Roche, a strategist at Quantum Strategy, said Ishiba is now a "dead man walking" with his Liberal Democratic Party "very likely to lose power completely or see its power very diluted in a messy coalition after an even messier protracted period of haggling."
"What is sure is that policy uncertainty will rule while the haggling goes on," he said in a flash research note Sunday night, predicting the yen to weaken from here.
"Equities will mark time (the bull period is over anyway). JGBs [government bonds] will stagnate waiting to learn about the next bout of futile fiscal largesse or lack of it," he added.
