The Tokyo Stock Exchange showed a slight increase on Tuesday, October 29, in a cautious market in the face of post-election political uncertainty in Japan, while oil prices are trying to recover after their plunge on Monday. In Tokyo around 02:30 GMT, the flagship Nikkei index gained 0.55% to 38,816.32 points, and the broader Topix index gained 0.81% to 2,679.32 points.
The market is supported by the gains made on Wall Street the day before, against a backdrop of plunging oil prices. And securities in the banking sector benefit from the strengthening of American bond rates, like Mizuho (+3.05%) or MUFG (+3.33%). Industrial paint manufacturer Nippon Paint soared 24% at the start of trading after announcing its plan to acquire chemist AOC for $2.3 billion.
However, trade remains volatile, while the ruling coalition lost its parliamentary majority during early elections on Sunday – enough to make its promises of economic recovery uncertain. Now in the minority, the Liberal Democratic Party (PLD, conservative right) “should seek, to govern, to cooperate” with opposition groups in favor of increased public spending, “but as Parliament must meet within 30 days to elect the Prime Minister, uncertainty will continue”underline the experts of the Tokai Tokyo broker.
Investors will also be watching for a decision on Thursday from the Bank of Japan, which analysts expect to maintain its monetary status quo after having already raised its rates twice this year. Which could contribute to further weakening the Japanese currency against a reinvigorated dollar. It recovered somewhat on Tuesday after having fallen by more than 1% the day before: around 02:30 GMT, it was trading at 152.93 yen per dollar.
Sluggish Chinese economy
Around 02:45 GMT, the price of a barrel of Brent from the North Sea, for delivery in December, increased by 0.41%, to $71.71. That of West Texas Intermediate (WTI) gained 0.50%, to $67.71.
Prices are regaining some ground in Asian trade after having fallen by 6% on Monday, in a market relieved by the relative restraint of the Israeli attack against Iran – which spared energy sites. This brought attention back to the gloomy outlook for global demand – particularly against a backdrop of a gloomy Chinese economy – in the face of the swelling of an overabundant supply.
The climate remains cautious on mainland China's stock markets, ahead of this week's publication of corporate results and manufacturing indicators, amid expectations of potential liquidity injections by the central bank. Around 02:30 GMT, the Shanghai composite index nibbled 0.02% to 3,322.80 points, that of Shenzhen 0.08% to 2,004.11 points. Conversely, the Hang Seng index in Hong Kong gained ground (+1.26% to 20,858.56 points), before the publication of the quarterly results of the banking giant HSBC.
