Gains in Japanese Yen and Asian stocks following Shinzo Abe election
The majority of Asian stocks increased on Monday following news of the election victory for Shinzo Abe’s Liberal Democratic party in Japan.
It is the fourth time Abe has claimed general election victory in his political career; he previously governed from 2006 to 2007, before returning to power in 2012 after a spell of ill health.
Asian Markets React
The news gave the go-ahead for simpler policy stimulus and led to a spike in the dollar against the yen that amounted to the highest seen in three months.
We saw the Nikkei 225 surge 1.06%, notching gains for exporters on the softer currency of the Japanese. Mitsubishi Motor went up 2.12%, Nissan 1.34%, and even Sony saw an increase of 1.13%. The broader Topix rose a more modest 0.79%.
The election news also caused a sharp increase for the dollar, trading at 113.86 yen. The greenback reached 114.09 earlier than that, which was the highest level we’ve seen in over three months.
In Korean markets, there was a slip in the Kospi to 0.11% which erased early gains. Any gains seen in blue-chip tech hopefuls were offset by a general decline in retail and manufacturing plays.
Live Chart USD/JPY
In Australia, the S&P/ASX 200 added a notable 0.11%. There were gains on the broader index, led by a 1.59% rise in the telecommunications services.
Hong Kong’s Hang Seng index suffered a decline of 0.53% in the early trading. Mainland markets traded a fraction above the flat line – the Shanghai Composite 0.03% higher, and the Shenzhen Composite up 0.16%.
Following the impact of the Japanese elections, investors will want to keep an eye on the race for the US Federal Reserve Chair. President Trump indicated he was considering John Taylor, a Stanford University economist, and Jerome Powell, the current Federal Reserve Governor, among his candidates.
Meanwhile, in Asia, China’s 19th Party Congress continues to be a point of focus, as markets await news on the line-up of the country’s future leadership. The official unveiling of this information is due later this week.