Japan's parliament elects first female prime minister

Her victory marks a pivotal moment for a nation where men still hold overwhelming sway. But it is also likely to usher in a sharper move to the right on policies related to immigration and social issues.

Takaichi's victory was secured after her Liberal Democratic Party, which has governed Japan for most of its postwar history, agreed to a coalition deal with the right-wing Japan Innovation Party, known as Ishin, on Monday.

After years of deflation, Japan is now grappling with rising prices, something that has sparked public anger and fuelled support for opposition groups including far-right upstarts.

Like Abe, Takaichi is expected to favour government spending to jumpstart the weakened economy. That has prompted a so-called "Takaichi trade" in the stock market, sending the Nikkei share average to record highs, the most recent on Tuesday.

But it has also caused investor unease about the government's ability to pay for additional spending in a country where the debt load far outweighs annual output.

Takaichi had enough votes to get the premiership, but to govern effectively she will need the backing of more opposition lawmakers, said Tadashi Mori, a professor of politics at Aichi Gakuin University

"The two parties do not command a majority in either chamber and to ensure a stable government and gain control of key parliamentary committees, they will need to secure more than half the seats," he said.

Any attempt to revive Abenomics could also run into trouble, Mori said, because it was devised to fight deflation.

"In today's inflationary environment, further stimulus risks only weakening the yen. Likewise, cutting the consumption tax may spur demand, but it won't curb rising prices."

Takaichi was also approved by the less-powerful upper house and will be sworn in as Japan's 104th prime minister on Tuesday evening to succeed the incumbent Shigeru Ishiba, who announced his resignation in September to take responsibility for election losses.