Stocks in Japan fell sharply on Monday after the country’s governing party chose a leader some view as hawkish on interest rates, underlining how central bank decisions continue to set the course of the world’s fourth-largest economy after decades of easy money policy.

Japan's incoming prime minister, Shigeru Ishiba, said on Monday he will call a general election for Oct. 27 following his victory in one of the closest ever leadership races for the ruling Liberal Democratic Party.

Ishiba’s election marks a significant further shift in official Japanese politics toward remilitarization and preparations for war against China.