Japanese stocks surged more than 1% and Japanese bonds held steady as the resignation of the Japanese Prime Minister sparked speculation of fiscal expansion.

On Monday, the Japanese stock market soared, the yen weakened, and Japanese bonds held steady as Japanese Prime Minister Shinzo Abe announced his resignation, leading to speculation in the market that the next prime minister will increase government spending. The Nikkei 225 index rose 1.7% to 43,740.15 points; the TOPIX index rose 1%, reaching a record high. The yen fell 0.7% against the US dollar to 148.46. The yield on 10-year Japanese government bonds rose by 0.5 basis points to 1.575%. The five-year yield slipped by 0.5 basis points to 1.1%. One of the popular candidates to succeed is Seiko Noda, who is a staunch supporter of "Abenomics." "Seiko Noda is seen as having a strong tendency towards expansionary fiscal policy, which may be seen as more favorable for the Japanese stock market," wrote Morgan Stanley MUFG Securities analysts. On August 19, the Nikkei index hit a record high of 43,876.42 points, driven by optimism towards corporate governance reforms and investments in artificial intelligence. A Reuters survey shows that analysts believe the index will fall back to 42,000 points by the end of the year.