Japanese stocks fell sharply after Shigeru Ishiba won the ruling party's leadership race, causing uncertainty.

From Yahoo Finance: 2024-09-29 21:16:53

Japanese stocks fell sharply after Shigeru Ishiba won the ruling party’s leadership race over Sanae Takaichi. The Nikkei 225 Stock Average dropped 4.7%, and the yen weakened to 142.68 per dollar. Ishiba is expected to become the new prime minister and has called for clarity on the Bank of Japan’s policy normalization plans. He has also emphasized regional economic development and government spending to combat depopulation in rural areas. Investors are preparing for increased volatility until there is more clarity on Ishiba’s policies. Exporters were hit the hardest by the yen’s strength, while banks rose on Monday. Expectations for Bank of Japan policy changes are back after Ishiba’s win. Prime Minister Fumio Kishida had previously caused a decline in the Nikkei with capital gains tax hike proposals, termed the “Kishida shock.” The market remains sensitive to the yen’s movements, and Ishiba has pledged support for Japan’s rural economy. The overall direction out of deflation won’t change, advises Hirofumi Kasai of Tokio Marine Asset Management Co. Morgan Stanley MUFG Securities Co. recommends focusing on domestic demand-oriented stocks. Goldman Sachs Group Inc. warns of continued short-term volatility until Ishiba clarifies his stance on key investor concerns. Ishiba is expected to be confirmed as prime minister on Oct. 1, with attention then turning to a possible general election, economic data, and the US election.



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