<h1>Markets rally on election of ultra-conservative leader likely to become prime minister, yen weak, defence and auto stocks surge</h1> A ruling party elected an ultra-conservative leader likely to become prime minister, prompting a near 5% surge in the national stock index, yen weakening and sectoral gains in defence and autos; markets interpreted the outcome as continuity of market-friendly, hawkish and pro-spending policies. Legally relevant issues include potential shifts in fiscal and industrial policy, increased defence procurement contracts, trade and tariff negotiations affecting exporters, and governance risks from a ruling party lacking a clear lower-house majority amid fragmented opposition. Concurrent US federal shutdown delayed economic data, complicating cross-border market and policy assessments.