Financial markets want the Cabinet of Prime Minister Shinzo Abe to keep pushing the reforms promoted by Junichiro Koizumi, analysts say, but some fear the negative impacts of expected tax hikes and a deterioration in the government's relations with the Bank of Japan.

Market players closely followed the Tuesday formation of the new Cabinet, especially the key economic posts, for a clue to the speed of reforms going forward.

"I think the lineup is well-balanced," said Daisuke Uno, market strategist at Sumitomo Mitsui Banking Corp. "It appears that the groups cheering for Mr. Abe were put in position, and there have been no particular surprises."