Wall Street rally, Japan election drive Asian shares higher

Stocks advanced in Asia on Monday, with Tokyo’s benchmark up 2.5% after the ruling Liberal Democrats won a stronger than expected majority in an election Sunday.

Shares rose in all regional markets except Hong Kong and Bangkok.

The regional gains followed further milestones on Wall Street, where the three major indexes set records. The S&P 500 rose 0.2%; the Dow Jones Industrial Average gained 0.3% and the Nasdaq closed 0.3% higher.

Japanese Prime Minister Fumio Kishida’s coalition kept a comfortable majority in Sunday’s parliamentary election despite losing some seats as his weeks-old government grapples with a coronavirus-battered economy and regional security challenges.

“This removes a key political overhang that has been weighing on market sentiments . . . and drives risk-on moves in the Japanese market," Jun Rong Yeap of IG said in a commentary.

Kishida is expected to draw up a package of government spending and other measures to boost growth. He has backed away from earlier comments suggesting he favors raising the capital gains tax, a move that would largely tax the wealthy. Suggesting that might be one way to address growing inequality in Japan wilted share prices just after he took office.

Shares have since rebounded amid signs Kishida's administration will likely continue the market-supporting policies of his predecessors Shinzo Abe and Yoshihide Suga.

Tokyo's Nikkei 225 index surged 716 points to 29,610.18, while the Kospi in Seoul gained 0.5% to 2,982.72. In Sydney, the S&P/ASX 200 picked up 0.8% to 7,378.50. The Shanghai Composite index edged 0.1% higher, to 3,552.35.

Hong Kong's Hang Seng dropped 1% to 25,117.79 as investor concerns over financial risks for property developers added to worries over the economic outlook.

Wall Street logged its...