Japan's ruling coalition has lost its majority in the country's upper house, but Prime Minister Shigeru Ishiba has said he has no plans to quit.

CNBC's Martin Soong, Chery Kang, and Kaori Enjoji discuss how the ruling coalition's defeat in Japan's upper house election complicates policy formation in the country, including the Bank of Japan's aim to normalize monetary policy.

The loss on Sunday left the Liberal Democrats a minority party in both houses of Parliament, while two new nationalist parties surged.

Japanese markets were closed on Monday for a holiday, but the rise in the yen and Nikkei futures showed investors had already priced in the election outcome. The Japanese currency has weakened considerably this year on expectations of changes to taxes and a bigger fiscal deficit.

TOKYO (AP) — Japanese Prime Minister Shigeru Ishiba said Monday he will stay in office to tackle challenges such as rising prices and high U.S. tariffs after a weekend election defeat left his coalition with a minority in both parliamentary chambers and triggered calls for his resignation.

Japan’s Prime Minister Shigeru Ishiba faces an increasingly uphill battle in Sunday’s upper house election, and a loss could worsen political instability at a time of daunting challenges, such as rising prices and high U.

The loss is another blow to the coalition led by Prime Minister Shigeru Ishiba, who could face calls from his party to step down

The fringe far-right Sanseito party emerged as one of the biggest winners in Japan's upper house election, gaining support with warnings of a "silent invasion" of immigrants.