Asian Markets Gain As Yen Weakens After Japanese PM’s Resignation
Asian markets closed higher on Monday as the Japanese yen weakened following the resignation of Prime Minister Shigeru Ishiba, with Tokyo’s Nikkei index gaining 1.5 per cent.
The yen slipped to 147.82 against the dollar in afternoon trading, from 147.07 on Friday, boosting Japanese exporters. Bond yields also rose after Ishiba announced on Sunday he would step down less than a year into his tenure, sparking uncertainty in the world’s fourth-largest economy.
Michael Brown, senior research strategist at Pepperstone, said, “I don’t think we can say that the resignation of PM Ishiba is a complete surprise, as it’s been mooted for some time but the timing of the announcement is certainly unexpected. As for the market reaction, this obviously introduces significant downside risks for the Japanese yen and for long-end Japanese government bonds.”
He added that potential successors in Japan’s ruling party are “all likely to propose looser fiscal stances than Ishiba, hence further pressuring the long end of the curve, where demand for JGBs had already been waning quite significantly.”
Shanghai closed 0.4 per cent higher, Hong Kong rose 0.8 per cent, Taipei gained 0.2 per cent and Seoul advanced 0.5 per cent. Jakarta rose 0.6 per cent and Wellington added 0.4 per cent, while Bangkok and Singapore ended flat and Sydney shed 0.2 per cent.
Weak US jobs data last week also influenced sentiment, reinforcing expectations of a Federal Reserve interest rate cut this month.
Michael Wan, senior currency analyst at MUFG, said, “Rising expectations of Fed rate cuts and with that lower US yields should be a welcome development to some extent, providing some breathing space and policy room for Asian central banks. Nonetheless, the key risk for Asian currencies would also lie in a sharp US slowdown and hard-landing recession through sharply slower exports to the US, which we stress is not our base case.”
In early European trading, London rose 0.2 per cent, Paris climbed 0.5 per cent and Frankfurt gained 0.7 per cent.
At around 0700 GMT, Tokyo’s Nikkei stood at 43,643.81, up 1.5 per cent. Hong Kong’s Hang Seng gained 0.8 per cent at 25,618.79, while Shanghai’s Composite rose 0.4 per cent to 3,826.84. London’s FTSE 100 was up 0.2 per cent at 9,223.02.
The dollar traded at 147.82 yen, the pound at $1.3512, and the euro at $1.1722. Brent crude climbed 1.9 per cent to $66.72 per barrel, with West Texas Intermediate also up 1.9 per cent at $63.03.
New York’s Dow closed 0.5 per cent lower at 45,400.86 on Friday.
AFP
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