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▼ Nikkei Ends Sharply Lower On Political Uncertainty After Coalition Breakup
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Tokyo stocks ended sharply lower Tuesday, with the Nikkei index briefly sinking over 3 percent, as selling was spurred amid political uncertainty in Japan after the junior coalition partner of the ruling Liberal Democratic Party decided late last week to end their alliance.
The 225-issue Nikkei Stock Average ended down 1,241.48 points, or 2.58 percent, from Friday at 46,847.32. The broader Topix index finished 63.60 points, or 1.99 percent, lower at 3,133.99. Japanese financial markets were closed Monday for a public holiday.
On the top-tier Prime Market, the main decliners were electric appliance, nonferrous metal and securities house issues.
The U.S. dollar fell to the upper 151 yen range in Tokyo after Finance Minister Katsunobu Kato said earlier in the day that Japan is closely monitoring excessive fluctuations and disorderly movements in the currency market, while sharp declines of Tokyo stocks also prompted buying of the safe-haven yen, dealers said.
At 5 p.m., the dollar fetched 151.96-98 yen compared with 152.37-38 yen in London at 4 p.m. Monday. The U.S. currency market was also closed Monday for a national holiday.
The euro was quoted at $1.1548-1549 and 175.49-53 yen against $1.1561-1563 and 176.14-22 yen in London late Monday afternoon.
The yield on the benchmark 10-year Japanese government bond ended at 1.660 percent, down 0.030 percentage point from Friday's close, as the debt was bought on receding expectations that the Bank of Japan will raise interest rates soon.
Stocks were sold almost across the board, with the benchmark Nikkei closing below the 47,000 line, as the Komeito party's announcement Friday that it was leaving the LDP-led coalition sparked political uncertainty, including over whether LDP leader Sanae Takaichi will become Japan's first female prime minister.
The Nikkei's drop came after the index surged over 2,000 points last week on hopes for expansionary fiscal policies after Takaichi became party leader.
While the LDP could form a new ruling coalition or opposition parties could field a joint candidate for prime minister, "expectations for expansionary fiscal policies are unlikely to fade suddenly," said Maki Sawada, a strategist in the Investment Content Department of Nomura Securities Co.
"Until uncertainties recede, the market may remain volatile, but hopes for fiscal stimulus are likely to continue supporting the market," she added.
However, Masahiro Ichikawa, chief market strategist at Sumitomo Mitsui DS Asset Management Co., said, "There is concern over whether parties could reach a consensus on fiscal policy, and even if opposition parties were to form a coalition government, uncertainties would remain about its sustainability, which could weigh on the market."
Selling accelerated as investors unloaded exporter shares on the stronger yen. The market was also weighed down by worries that U.S.-China trade tensions could worsen.
Meanwhile, the benchmark price of gold set by Tokyo's Tanaka Precious Metal Technologies Co. hit an all-time high of 22,463 yen per gram after exceeding 22,000 yen for the first time in the morning, reflecting strong demand amid concern over U.S.-China trade tensions.
The 225-issue Nikkei Stock Average ended down 1,241.48 points, or 2.58 percent, from Friday at 46,847.32. The broader Topix index finished 63.60 points, or 1.99 percent, lower at 3,133.99. Japanese financial markets were closed Monday for a public holiday.
On the top-tier Prime Market, the main decliners were electric appliance, nonferrous metal and securities house issues.
The U.S. dollar fell to the upper 151 yen range in Tokyo after Finance Minister Katsunobu Kato said earlier in the day that Japan is closely monitoring excessive fluctuations and disorderly movements in the currency market, while sharp declines of Tokyo stocks also prompted buying of the safe-haven yen, dealers said.
At 5 p.m., the dollar fetched 151.96-98 yen compared with 152.37-38 yen in London at 4 p.m. Monday. The U.S. currency market was also closed Monday for a national holiday.
The euro was quoted at $1.1548-1549 and 175.49-53 yen against $1.1561-1563 and 176.14-22 yen in London late Monday afternoon.
The yield on the benchmark 10-year Japanese government bond ended at 1.660 percent, down 0.030 percentage point from Friday's close, as the debt was bought on receding expectations that the Bank of Japan will raise interest rates soon.
Stocks were sold almost across the board, with the benchmark Nikkei closing below the 47,000 line, as the Komeito party's announcement Friday that it was leaving the LDP-led coalition sparked political uncertainty, including over whether LDP leader Sanae Takaichi will become Japan's first female prime minister.
The Nikkei's drop came after the index surged over 2,000 points last week on hopes for expansionary fiscal policies after Takaichi became party leader.
While the LDP could form a new ruling coalition or opposition parties could field a joint candidate for prime minister, "expectations for expansionary fiscal policies are unlikely to fade suddenly," said Maki Sawada, a strategist in the Investment Content Department of Nomura Securities Co.
"Until uncertainties recede, the market may remain volatile, but hopes for fiscal stimulus are likely to continue supporting the market," she added.
However, Masahiro Ichikawa, chief market strategist at Sumitomo Mitsui DS Asset Management Co., said, "There is concern over whether parties could reach a consensus on fiscal policy, and even if opposition parties were to form a coalition government, uncertainties would remain about its sustainability, which could weigh on the market."
Selling accelerated as investors unloaded exporter shares on the stronger yen. The market was also weighed down by worries that U.S.-China trade tensions could worsen.
Meanwhile, the benchmark price of gold set by Tokyo's Tanaka Precious Metal Technologies Co. hit an all-time high of 22,463 yen per gram after exceeding 22,000 yen for the first time in the morning, reflecting strong demand amid concern over U.S.-China trade tensions.
- 14/10 20:45
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