Correction corrects Nikkei closing level
Tokyo (awp/afp) – The Tokyo Stock Exchange recovered on Tuesday, strengthened by a decline in the yen, climbing by almost 2% after falling the day before in a climate of uncertainty over the economic policy of Shigeru Ishiba, new Prime Minister of Japan.
Chinese places are closed due to a public holiday in the country, which is celebrating the 75th anniversary of the People’s Republic on Tuesday.
In Tokyo, the flagship Nikkei index ended up 1.93% at 38,651.97 points, erasing part of its losses from the day before, while the broader Topix index rose 1.7% to 2,690, 78 points.
The Nikkei fell by almost 5% on Monday following the appointment last weekend of Mr. Ishiba as head of the Liberal Democratic Party (PLD). He officially became prime minister on Tuesday, replacing the unpopular Fumio Kishida.
The markets were instead counting on the election of Sanae Takaichi, whose comments in favor of an accommodating monetary policy had contributed to lowering the yen.
Conversely, Mr. Ishiba seemed more inclined to support the normalization of the policy of the Bank of Japan (BoJ), which ended its negative rates in March, then increased its rates again at the end of July, with the effect to strengthen the yen –at the risk of hurting Japanese exporters.
However, after having appreciated sharply on Friday and Monday against the dollar following the appointment of Shigeru Ishiba, the yen began to decline: the greenback rose to 144.39 yen per dollar on Tuesday around 06:25 GMT, against 143. 63 yen Monday at 9:00 p.m. GMT.
“Although Mr. Ishiba appears to favor more prudence in fiscal and monetary policy than his predecessors, we doubt that he will take any initiatives that displease the markets, at least in the near future, given that his political power does not is not yet very solid”, commented analysts at UBS bank.
“He declared that he would respect the independence of the BoJ, and that he would not push it to immediately pursue the normalization of its policy,” insist the analysts.
On the market, Japanese automobile companies – major exporters – benefited from the decline in the Japanese currency on Tuesday: Toyota finished up 2.10%, Honda 2.29% and Nissan 1.79%.
The Tokyo market was also reinforced by the Tankan quarterly barometer published Tuesday by the BoJ, which reported a stabilization of morale among large manufacturing companies and increased confidence in the services sector.
The euro also appreciated to 160.85 yen against 159.94 yen the day before, and was trading for 1.1134 dollars instead of 1.1135 dollars on Monday.
On the oil market, the price of a barrel of American WTI was almost stable (+0.06%) at $68.23 around 06:25 GMT and that of Brent from the North Sea gained 0.07% to 71.77 dollars.
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