The yen sank against the dollar following a contentious election in Japan that has thrown the country into political disarray. Meanwhile, the dollar appears poised to achieve its most significant monthly gain in two and a half years. In Tokyo, Japanese 10,000 yen notes were seen next to U.S. 100 dollar bills, highlighting the considerable fluctuation in currency exchange rates.
As the dollar/yen exchange rate hit 153.88, the dollar index is on track to notch its most significant monthly rise since 2022. The election in Japan has introduced a new wave of uncertainty, causing investors to seek more stable assets, thus bolstering the demand for the dollar. Concurrently, the Australian dollar (AUD) and New Zealand dollar (NZD) have reached two-and-a-half-month lows.
Global stocks experienced gains on Monday as market participants anticipated the release of earnings reports from major Wall Street firms, including the “Magnificent 7.” This optimism comes despite the political turmoil in Japan and a decline in oil prices, as tensions in the Middle East appear to have subsided. Japan’s benchmark Nikkei 225 and its Topix index climbed on Monday, supported by a weak yen amid political uncertainty following the recent election.
Yen sinks amid Japan’s political disarray
The ruling Liberal Democratic Party (LDP) and its coalition partner, Komeito, secured 215 out of 465 seats, losing their majority. According to analysts, this political shake-up has created an air of uncertainty that has deterred the Bank of Japan (BOJ) from hiking interest rates. The Nikkei rose 1.82% to close at 38,605.53, leading gains in Asia, while the Topix advanced 1.51% to 2,657.78.
The yen weakened 0.64% to 153.28 against the U.S. dollar. Izumi Devalier, chief Japan economist at Bank of America, remarked that while political instability could delay rate hikes, the BOJ cannot ignore the yen’s sustained weakness.
“I don’t think that necessarily means the BOJ will be on hold for the foreseeable future. We could still be on track for hikes in January or even December, depending on where the yen goes,” she said. South Korea’s main index gained 1.13% to 2,612.43, while the small-cap Kosdaq was 1.8% higher, ending at 740.48, rebounding off a six-week low.
Australia’s market and Hong Kong market
Australia’s market rose 0.12%, closing at 8,221.5. Hong Kong’s market reversed earlier losses to gain 0.18% in its final hour. In comparison, mainland China’s CSI 300 traded 0.2% higher and finished at 3,964.16, despite China reporting its worst industrial profit numbers since the pandemic. Chinese steelmaking stocks climbed on Monday after the China Iron and Steel Association signaled potential consolidation in the sector. Baoshan Iron & Steel, the largest steelmaker by market cap, rose 4.86%, while Angang Steel saw a 4.17% gain.
Valin Steel, China
China’s fourth-largest steelmaker, Valin Steel, saw a 9.74% gain. In September, China’s industrial profits plunged 27.1% yearly, the steepest decline since the pandemic’s onset. Insufficient demand and a sharp decline in producer prices were the primary factor.
<script type=”text/javascript” src=”https://video.foxnews.com/v/embed.js?id=6363866899112&w=466&h=263″></script><noscript>Watch the latest video at <a href=”https://www.foxnews.com”>foxnews.com</a></noscript>
Oil prices slid more than 4% as Israeli strikes on Iran were deemed “limited” by local media, reducing concerns of a supply disruption. Brent crude fell 4.43% to $72.68 a barrel, while U.S. crude futures dropped 4.57% to $68.5 per barrel. On Friday, the Nasdaq rose 0.56% to a new all-time high of 18,518.61, buoyed by mega-cap tech stocks.
The S&P 500 added 0.8%, while the Dow Jones Industrial Average fell 0.03% to 5,808.12, and the Russell 2000 dropped 0.61% to 42,114.40. The market movements come ahead of a significant week for tech earnings in the U.S., with investors showing a preference for tech stocks. Meanwhile, concerns over a dip in iPhone sales led KeyBanc Capital Markets to downgrade Apple, causing shares to fall nearly 1% in premarket trading.
