Tokyo Surges, Yen Plummets Following Takaichi Victory Amidst Uneven Asian Market Performance
TOKYO – Tokyo’s Nikkei 225 index soared 4.5 percent to 47,835.36 on Monday, while the Japanese yen weakened significantly, trading up at 149.84 yen against the dollar, from 147.45 yen. The market reaction follows the weekend victory of Sanae Takaichi in the Liberal Democratic Party’s leadership race, signaling a potential shift in economic policy.
The gains in Tokyo contrasted with a mixed performance across other Asian markets. Singapore and Manila also saw increases, but Hong Kong’s Hang Seng Index fell 0.5 percent to 26,995.12, and both Sydney and Seoul closed in negative territory. Shanghai remained closed for a holiday. The broader market sentiment was buoyed by Bitcoin reaching a new peak of $125,689 on Sunday.
The yen’s decline reflects expectations that Takaichi’s policies, which favor fiscal stimulus and a weaker yen to boost exports, will be implemented. This comes as global markets continue to navigate uncertainty surrounding the ongoing US goverment shutdown, now entering its second week after senators rejected a fourth funding fix proposed by President Donald Trump’s Republicans. Federal agencies have been without funding since Wednesday, disrupting public services and delaying the release of key jobs data.
Despite the shutdown, economists at Bank of America believe the federal reserve is likely to cut rates at its next meeting at the end of the month, citing recent reports indicating a slowing labor market. “It’s still likely that the shutdown will end in relatively short order, allowing for the release of the September jobs report before the October (policy) meeting,” they stated. Even a strong September payrolls report wouldn’t necessarily deter the Fed, with analysts anticipating “doves on the committee” will point to downward revisions in previous data. Fed chief Jerome Powell’s recent “dovish pivot” further supports this expectation.
Elsewhere, gold prices continued their ascent, pushing past $3,924 and nearing $4,000 an ounce, driven by the US shutdown and anticipated rate cuts. Oil prices also rose, jumping more than one percent after OPEC+ agreed to a smaller-than-expected supply boost of 137,000 barrels a day.
Key figures at around 0230 GMT:
* Tokyo - Nikkei 225: UP 4.5 percent at 47,835.36
* Hong Kong – Hang Seng Index: DOWN 0.5 percent at 26,995.12
* Shanghai – Composite: Closed for a holiday
* Dollar/yen: UP at 149.84 yen from 147.45 yen
* Pound/dollar: DOWN at $1.3455 from $1.3482
* Euro/pound: UP at 87.17 pence from 87.09 pence
* Euro/dollar: DOWN at $1.1728 from $1.1742 on Friday
* West Texas Intermediate: UP 1.5 percent at $61.78 per barrel
* Brent North Sea Crude: UP 1.4 percent at $64.45 per barrel
* New York – Dow: UP 0.5 percent at 46,758.28 points (close)
* London - FTSE 100: UP 0.7 percent at 9,491.25 (close)
