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​Japan Stocks Rally After Ishiba-Driven Slump

EBC Financial Group

Japan's Nikkei rose 1.5% in early trading after shedding 4.8% on Monday as investors contended with perceived monetary policy hawk Shigeru Ishiba winning a contest to become the country's prime minister.

Shigeru Ishiba
Shigeru Ishiba

Some analysts pointed out that the Japan market has been seen as the "anti-China trade" against geopolitical tensions. In that sense, the blistering rally in Chinese market could turn out to be a headwind.

The election result means the BOJ "will not face any political hurdle for hiking rates further." According to Sumitomo Mitsui Banking Corporation. A stronger yen puts pressure on exporters. In a sign of the effect, Japan's export growth slowed sharply in August as shipments to the US dropped for the first time in three years, while machinery orders unexpectedly shrank in July.

Industrial production declined more than expected in August, with uncertainties over the global economy further clouding the outlook for the country's manufacturing sector.

The Nikkei index has been highly volatile last month amid concerns about central bank decision and political turmoil. Higher high and higher low indicate that uptrend will continue, with resistance seen around 40,000.

Disclaimer: This material is for general information purposes only and is not intended as (and should not be considered to be) financial, investment or other advice on which reliance should be placed. No opinion given in the material constitutes a recommendation by EBC or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person.

Source: https://www.ebc.com/forex/-japan-stocks-rally-after-ishiba-driven-slump
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