Tokyo (awp/afp) – Asian stock markets fell on Tuesday, the Tokyo market remained cautious a few days ahead of general elections in Japan, while elsewhere in the region remained suspended from the US presidential vote and the Chinese economy.
Political uncertainty weighs on Tokyo
In Tokyo, the flagship Nikkei index closed up 1.39% at 38,411.96 points and the broader Topix index lost 1.06% at 2,651.47 points.
The market remained sluggish after a mixed performance on Wall Street.
“Investors are jittery ahead of Sunday’s legislative election in Japan,” as a poll considers the risk of Prime Minister Shigeru Ishiba’s coalition losing its majority, Tokai Tokyo Intelligence experts commented
“Stock market securities linked to Mr. Ishiba’s policies, in defense or (economic recovery) activities in (rural) regions, have been massively sold and there is growing concern about future economic policies,” they added. Mitsubishi Heavy Industries, the heavyweight in the defense industry, lost 2.68 percent.
The Tokyo stock market “could start to rise again thanks to the weakening of the yen to the lowest level in three months”, making the share price more attractive, tempered Stephen Innes, analyst at SPI Asset Management.
Around At 06:00 GMT, the Japanese currency was trading at 150.85 yen per dollar, after falling by midday to 151.10, the lowest since August 1.
The yen weakens in the face of the rise in the dollar, which is reinforced by geopolitical risks and by the US central bank’s (Fed) caution against further interest rate cuts, ensuring the greenback a more attractive return – especially in contrast to the Bank of Japan (BoJ), which has to intention not to raise its very low interest rates for the time being.
The elections in China and the US fuel volatility
Around At 06:00 GMT, Shanghai’s composite index lost 0.21% to 3,261.12 points, while Shenzhen’s index fell 0.32% to 1,930.74 points. Meanwhile in Hong Kong, the Hang Seng index lost 1.28% to 20,477.18 points.
Across Asia, markets are focused on developments in the US campaign, where a potential Donald Trump vote could lead to massive increases in US tariffs to the detriment of its trading partners in the region.
In China, which would be the first target of tougher US trade restrictions, the central bank’s rate cuts to revive credit and support activity have struggled to convince investors.
Enough to maintain high volatility according to Stephen Innes, “the next two weeks will be a rollercoaster (in the markets) facing a perfect cocktail of dangers: a hotly contested US presidential election, crucial monetary policy decisions, quarterly corporate results and geopolitical threats in the Middle East.
Oil and gold flow back
In the oil market, however, prices recovered on Tuesday after a fresh rise on Monday amid concerns about an Israeli response against Iran.
Around At 06:00 GMT, the price of a barrel of Brent from the North Sea was down 0.51% at $73.91. A barrel of American West Texas Intermediate (WTI) fell 0.30% to $70.35.
A safe haven boosted by geopolitical uncertainty, gold also fell to $2,730.90 an ounce, after climbing the previous day to a new all-time high during the session.
pitcher/nth